Frontier Air done in by credit card processor

[dkf]

Frontier Airlines, the latest airline to file for bankruptcy, was pushed over the brink by a problem that could spread to other carriers: credit card troubles.

The carrier on Friday blamed its Chapter 11 bankruptcy protection on a cash squeeze caused by its credit card processing company, which has decided to keep a larger chunk of the Denver airline's ticket revenue.

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The move ends a policy under which the processor, First Data Corp, passed on most money from ticket sales to Frontier. The change is intended to protect First Data, which would be on the hook for ticket refunds if Frontier stops flying. Frontier plans to continue operating while in bankruptcy.

First Data's decision represents a new threat to an industry facing jet fuel prices that have soared 74 percent in one year, a new government focus on safety that has grounded thousands of flights in recent days and tight competition and falling demand that, combined, have limited carriers' ability to raise prices

http://biz.yahoo.com/ap/080411/airlines_outlook.html?.v=10

[Demeter]

1. self-deleted

[Warpy]

2. Credit card companies are finally cutting their own throats

now that they've sucked so many people into amassing debts they'll spend the rest of their lives trying to pay off at constantly increasing "minimum payment" rates with escalating interest rates.

The days of cheap, easy credit are OVER. Expect more businesses to stop accepting credit cards as their fees go up.

[1]

5. different story here...

first data corp does not issue credit cards or credit.

they process the credit card transactions.

[Warpy]

11. Right, and they increased the bite

that was rather my point.

[TomInTib]

8. We are almost there.

We have a high-end Pan-Asian Art, Furniture, and Accessories gallery in one of the wealthiest communities in America.

And Amex was the first to go, much to the consternation of our customers. Unfortunately, their accumulated air-miles and cash-back doesn't put food on our table(s).

[flamingyouth]

13. I dumped AmEx when I had my small business too.

Their fees were just absurd.

[madrchsod]

3. if they raise the fees even 5% over what they take now

it would be enough to force them out of business...yup "easy credit" is a thing of the past. good thing i do`t have any credit cards

[XOKCowboy]

15. I have to have credit cards for business..

Since I am my business they are in my name. I keep two. One strictly for business transactions and one for personal business and travel. I pay them off completely every month. I know better than to ever get behind again.

I was smart enough when I lost my job to use part of my 401k money to pay off all of my credit cards before I reinvested the rest in an IRA. I figured better to lose a little interest than pay the finance fees. I'm glad I did.

I like being the credit industries worst kind of customer. The kind that uses their money interest free. :)

[Demeter]

4. Aha! Wells Fargo Bank and First Data Corp are Symbiotic

http://ir.firstdata.com/releaseDetail.cfm?ReleaseID=217395

https://www.wellsfargo.com/press/saltlakerls20020207?year=2002

http://ir.firstdatacorp.com/news/releasedetail.cfm?ReleaseID=90087

So whether First Data panicked all on its lonesome, or whether Wells Fargo has a sock puppet, is a moot issue.

This is why incest is a crime--it's so ugly!

ON EDIT:

http://ir.firstdatacorp.com/news/releasedetail.cfm?ReleaseID=234109

This is even more revealing!

[madrchsod]

9. the majority of forecloses where i live are wells fargo

or bundled german bank mortgages. no more than 5 from the local savings and loans in the area...we were going to get a loan from wells fargo but they turned us down but a local savings and loan gave us one because i had 1/3 equity in a 90,000 dollar house...dam got really lucky...

[Sen. Walter Sobchak]

6. this could be any business in America

The credit card industry fucks over the merchants even more than the customers, we have a client about to sue their processor for running a scam that led to "mistakes" that would generate charge-backs being made deliberately. Thus justifying them in witholding a greater amount of their funds to cover the said chargebacks that their "mistakes" generated. It also creates problems between the merchant and their customers because to the customer it looks like the merchant is trying to rip them off.

And naturally when this merchant was having problems with excessive charge-backs finding better terms with an alternate processor was virtually impossible.

I really hope this goes to court and isn't settled, a million watts of light needs to be shined on this corner of the credit card industry.

[melody]

7. It was only a matter of time until this spread from online business to brick and mortar

I know a number of net-based business people who were hobbled by just such stuff.

[muriel_volestrangler]

10. So this is the airline equivalent of a run on a bank that ends up ruining the bank

The credit card processing company has to have confidence that the airline will continue trading, otherwise it would lose its money. But when that confidence disappears, the processing company says "we're not going to hand over the money you thought you'd get" - and that forces the airline into Chapter 11, fulfilling the prophecy of the lose of confidence.

[girl gone mad]

12. blame ata..

for telling all of their customers who had tickets on canceled flights to call the credit card companies and demand their money back.

[XOKCowboy]

14. I live in Denver, Frontier's home base and they've been doing great

They've been giving United a run for their money out of here and according to local reports had been doing well financially. Of course like all airline riding a razor's edge of profitability and bankruptcy. When Wells Fargo/First Data dropped this bomb on them, instantly their cash flow was cut off.

My point is that Frontier is a good airline who's being taken down by a predatory lender's arbitrary change of terms.