I agree with the AFF response article, except for one detail about carrier surcharges: "We accept that these charges exist, however, more transparency about the existence and amount of these carrier charges is required."
These charges started off as fuel surcharges after massive fuel price rises. That they have remained is little short of fraudulent misrepresentation by the airlines and the fact that it has become common doesn't make it any more right. It performs the same action as component pricing, which is to obscure the true cost of a purchase. As such, it would be consistent for the ACCC to restrict it in a similar way to component pricing involving only money. (i.e. outlaw it)
While I personally don't like carrier charges either, they have become an industry "norm" with many airlines (including those outside of Australia) charging them. The government could ban them in Australia - as the governments of Brazil and the Philippines have done - and this may indeed be a good thing for consumers in the short term. But I fear that this may result in unintended consequences as airlines look to recover their margins (such as a massive increase in points required for a redemption) in the long term.
In any case, if carrier charges are going to be applied, airlines (especially Qantas) need to be more transparent about the amounts. The fact that Qantas does not currently publish a list of carrier charges anywhere, and you can't see the taxes & charges online on any reward booking for which you don't already have enough points, is a disgrace.
If the public was fully aware of the existence and amount of each airline's carrier charges, this could result in natural market pressure on Qantas to further reduce or eliminate them, without the need for unnecessary government regulation that - as we've seen in the past with things like the RBA interchange fee regulations - may backfire.
Mattg deserves enormous credit for his research and for stating AFF will submit its thoughts.
My only standout disagreement with Mattg would be 'why is AFF not concerned by FF points having an expiry date?'
When we give our (or our company's/govt agency's) money to an airline for a flight, that transfer of funds doesn't suddenly "expire" - i.e. it never reverts back to you or I, because a service has been provided.
So if FF points are part of the lure to get us to book with airline X and not with a competitor (or in Australia, drive or go by train/ferry/bus where practical), why should they ever expire (assuming the airline remains in business)?
It's the 'gift card' argument. I believe one well known retailer of books has as part of its business model that around 30 per cent of gift cards will never be redeemed because they expire 12 months from date of issue.
I hope AFF (looking at you, Mattg) changes its collective mind on this issue.
Again, I think we need to be careful what we wish for. If loyalty programs at least made a proper effort to inform members before their points expire, then this at least gives members a fair opportunity to take action before this happens.
Loyalty programs factor in "breakage" (points that expire unredeemed) as a core component of the business model and margin. This diagram from Qantas' 2017 investor day presentation shows this:
If you totally eliminate breakage, the loyalty program will need to find other ways to generate this revenue - which could result in a devaluation or negative changes for all program members.
Those are my thoughts, but I am interested to hear others' opinions on these issues as well.
www.accc.gov.au
Sample AFF with no advertisements? More..
