UNITED AIRLINES SET TO CAUSE FINANCIAL TURBULENCE

A move tomorrow by embattled United Airlines is likely to raise ticket prices for thousands of fliers -- and steal planeloads of business from travel agents.

United, which is expected to post a second-quarter loss of about $350 million when it reports this week, and is looking to conserve cash, will stop processing credit-card transactions for certain travel agencies on Monday.

That means those agencies will have to start paying the 3.5 percent credit card processing fees that UAL currently absorbs -- $17.50 on a $500 ticket -- a cost that will likely be passed on to customers.

Jennifer Wilson, co-owner of New York's Wilson Travel, which will not be impacted by United's move, said, "I think it is a huge deal. If they do it, odds are other airlines will follow."

Half of airline tickets are now purchased through the country's roughly 18,000 travel-agency locations.

Fliers could avoid the possible added cost by going to United's Web site, a move that would nonetheless siphon business away from travel agents.

In the metro area, UAL has the biggest presence at JFK where it flies to and from the West Coast.

The move by United is being called a pilot program and comes at a time American Express is considering holding back a larger percentage of UAL's charges. AmEx wants to make sure that if UAL goes bankrupt it can refund unused tickets without taking a loss.

Chris Russo, president of the American Society of Travel Agents, explained that when Delta in the 1990s started cutting off commissions for travel agencies it set a precedent, and soon every other carrier followed suit. The same scenario played out for passengers with baggage fees.

A UAL spokeswoman said the move will impact a very small percentage of travel agencies. She said she could not address long-term plans as UAL is a public company.

She added that UAL is taking this action as a performance-related penalty against specific travel agencies.

Carriers across the industry have the incentive to boost short-term earnings.

American Airlines last week reported what Credit Sights analyst Roger King described as dismal numbers, with revenue dropping 23 percent compared to last year.

Local Congressional representatives Carolyn McCarthy and Nydia Velazquez joined 16 others last week in sending a letter to UAL asking them to postpone the move.