Bad news for QF, great news for TA's

[ejb]

Just saw this on smh.com.au

Qantas in costly court case loss

The court today upheld an appeal by Leonie's Travel, forcing airlines to include the fuel surcharge in their base figure for calculating commissions paid to agents.

This could be a very costly loss.

ejb

[Dave Noble]

Good to hear. Maybe next the airline will stop scamming a fundamental cost of travel as an extra

[Travel Guru]

That's great news...it's always amazed me how QF and other airlines could get away with including what is an operating expense as a tax...its not just a good day for TA's, its a good day for airline travellers too, hopefully it'll see the taxes on redemtions drop too.

TG

[futaris]

Travel agents today won a landmark battle over airline commissions on fuel surcharges. The final instalment of the long-running battle between agents and Qantas ended in the Federal Court this morning with a ruling that Qantas had breached contractual obligations. In their final judgment, appeal court judges Justices Lander, Rares and Besanko found that since the International Air Transport Association’s agency agreement, defines “fares applicable” as monies paid for transportation excluding third party charges and taxes, airlines did not have the right to exclude fuel costs from commissionable fares. Steven Lewis, practice group leader at law firm Slater and Gordon representing travel agents, said he believed the ruling to be a world first. “This is an important day for travel agents, not only in Australia but around the world. Since May 2004 travel agents have said they were entitled to be paid commission on airline fuel surcharges and the court has upheld this view,” he said. Qantas is unlikely to be given leave to appeal the case to any higher court, since the ruling draws on a 2000 UK case and the judges expressed a desire for international consistency.

The court must now decide how much commission will be paid back to agents and how. Five other airlines named in the original case will now have to decide whether to contest or accept this ruling. Only those agents opted in to the case, mainly independents, will benefit from the windfall, which is expected to run into the “tens of millions of dollars”, Lewis said. Any final pay-out is not expected until 2011.

Wonder when the taxes for redemptions will drop.

[Worldtraveller8888]

That is great news.

I too couldn't work out how they argued that the fuel surcharge wasn't part of the price. It's not as if fuel wasn't a component of the ticket price before surcharges came along!

WT

[anat0l]

Is this tussle referring to the ticketing line item YQ?

I wonder how QF - amongst other named airlines - argued in the courts as to how fuel can be considered as a non-fundamental expense and thus a tax/surcharge? Makes little sense to me (and of course this is detail which will never make the news article - only the court proceedings).

The article says QF are considering their options. Looks like their only option is to concede - the judges don't seem to be willing to grant QF any avenue for appeal, plus considering the judgement was made on basis of a precedent it also seems unlikely to continue.

According to the article, apart from QF the other airlines implicated to have also participated in the illegal practice are NZ, CX, BA, SQ and MH.

So we all expect YQ to go down (or rather, eliminated) after this? QF will hurt the most on international routes. SQ have had high taxes/charges on awards as well - is a significant portion of that YQ?

In any case, where is the compo money going? TAs get a cut; I'm assuming (perhaps too quickly) that customers that were affected (i.e. booked awards in the said timeframe) will get nothing.

[Dave Noble]

I don't see that the passengers would be entitled to anything back, just that TAs should be able to claim commission based on fuel finess from them

[docjames]

Wonder when the taxes for redemptions will drop.

About a milisecond before the number of points required for any redemption increases....

[JohnK]

Great news and about time.

its not just a good day for TA's, its a good day for airline travellers too, hopefully it'll see the taxes on redemtions drop too.

I can see fuel surcharges dropping on classic awards although I believe Qantas will increase the QFF points required for the award. Should not affect Any Seat awards other than the minimum points costs increasing.

Hopefully we will not see an increase in airfares to make up for the commission payout.

[straitman]

Which ever way this plays out I see it as a move in the right direction. Trouble is that a few more things may need to happen to sort this though to an appropriate conclusion for the long suffering passengers.