Another airline credit card gouge

[bushtuckerman]

Interesting article in today's SMH (Sun 20 Sept09) about airlines charging multiple credit card fees for single transactions, and reaping millions of dollars in the process (see link below).

credit card airlines

It seems that all domestic airlines impose "per person, per flight" surcharges for credit payments, which means that a family of four travelling interstate (return) must pay eight separate credit card fees on one online transaction. That's a significant and unneccessary impost that clearly does not reflect the cost of the transaction. Seems that APRA is still asleep at the wheel.

......and I thought Telstra's corporate behavior was bad.

Cheers
Bush

 

[opusman]

It seems that all domestic airlines impose "per person, per flight" surcharges for credit payments

Qantas don't - theirs is a per-transaction fee (although as a fixed fee it can easily end up being a very high percentage of the transaction).

 

[Ikara]

Er sorry - Qantas do! I booked wife and three girlfriends Mel - Adl - Mel for a "shopping weekend" - more fool me. I used my credit card and each booking attracted a credit card fee, so I paid four credit card fees on one transaction/booking. I wasn't a happy camper.

JB

 

[anat0l]

Er sorry - Qantas do! I booked wife and three girlfriends Mel - Adl - Mel for a "shopping weekend" - more fool me. I used my credit card and each booking attracted a credit card fee, so I paid four credit card fees on one transaction/booking. I wasn't a happy camper.

JB

Luckily it is not a per flight fee, unlike DJ and JQ which does apply its fees per person per passenger.

In the case of your MEL-ADL-MEL booking for your wife and her girlfriends (assuming that you booked this as one PNR, i.e. a return flight with all 4 pax on it):

• QF would have set you back $7.70 x 4 pax = $30.80 in fees
• DJ would have set you back $3.50 x 2 sectors (i.e. MEL-ADL and ADL-MEL) x 4 pax = $28.00
• JQ would have set you back $3.00 x 2 sectors x 4 pax = $24.00
• TT would have set you back $6.00 x 2 sectors x 4 pax = $48.00

For point-to-point fares this is not a big deal, but when you have multiple flights, the per sector per passenger charges start to hurt a bit. At least Qantas only slug you per passenger: thank you multi-city bookings. A more elementary situation would be something like someone who lives in HBA that needs to get to PER. Here, it is unavoidable that you would need to go something like HBA-MEL-PER because there are no directs. In a case like this for 2 pax return flights:

• QF: $7.70 x 2 pax = $15.40
• DJ: $3.50 x 4 sectors (i.e. HBA-MEL-PER is 2 sectors, then again on return) x 2 pax = $28.00

Since most people probably only book one return flight at a time anyway (i.e. not many multi-city bookings), in the end QF does end up being a rather hefty charge. In all cases, however, credit card fees suck, and I think Australia is the only country with an airline industry that allows this level of extortion. (Although NZ is starting to consider credit card fees itself....)

 

[Mal]

In all cases, however, credit card fees suck, and I think Australia is the only country with an airline industry that allows this level of extortion. (Although NZ is starting to consider credit card fees itself....)

UK is as bad, if not worse!

Our favourite whipping horse - Ryanair charges £5 per person/flight.
BA charges differing fees based on "longhaul" or "shorthaul" and the country booked from.
Easyjet charges a % I think.

etc etc.

So it's a global trend.

 

[djfuzz]

$25 per person on international bookings too. Not sure how the credit card companies discriminate based on your destination.

Bit of a laugh really.

 

[anat0l]

$25 per person on international bookings too. Not sure how the credit card companies discriminate based on your destination.

Bit of a laugh really.

Thankfully Trans-Tasman isn't that much (usually just domestic fee, unless you fly a carrier with no c/c charge policy).

$25 per person other international is rather a laugh. To put it in perspective, let's say we have two flights to LAX for $900 r/t per person, inc. taxes. That's $1800 all up; now add $50 for the booking fees. That's 2.78%; a bit more extortionate than most travel agents (the Flight Centre I was doing business with once charged 1.19% for a credit card).

On the other hand, take two flights to LHR for $1500 r/t per person a/i. This gives $3000 in total plus the $50 again. Now the c/c charge is 1.67% of the fare.

Finally, let's suppose a booking for two people to SIN in Business for $6000 r/t per person a/i (that's probably a very optimistic guess ). Now we have $12000 in total plus the $50. Final c/c charge %ge? 0.42% of the total fare.

 

[opusman]

Er sorry - Qantas do!

Sorry yes; but it's per-person, per-booking, not per-person, per-flight.
Either way a complete rip-off.

If you ask me the Reserve Bank have a lot to answer for.

 

[Dave Noble]

Then don't pay with credit card and the fee can be avoided completely

Dave

 

[anat0l]

Then don't pay with credit card and the fee can be avoided completely

Dave

But that would be the easy way out. :mrgreen:

Also, tickets must be booked at least one week in advance otherwise you can't use BPay. Not sure about the new PoLi system. And our international friends that want to book AU domestic flights or ex-AU itineraries will have no choice.


In a way, you could say the options and trade-offs justify the charges. But then again, may be not...

 

[oz_mark]

But that would be the easy way out. :mrgreen:

Also, tickets must be booked at least one week in advance otherwise you can't use BPay. Not sure about the new PoLi system. And our international friends that want to book AU domestic flights or ex-AU itineraries will have no choice.

On the red-rat, if you are booking less than 7 days out, you can use a debit mastercard to avoid the fee.

 

[Dave Noble]

Also, tickets must be booked at least one week in advance otherwise you can't use BPay. Not sure about the new PoLi system. And our international friends that want to book AU domestic flights or ex-AU itineraries will have no choice.

Debit mastercard is accepted for bookings within 7 days

Dave

 

[N860CR]

It would be nice if there was some kind of national regulation of this whole credit card surcharge thing. Unfortunatley, retailers can charge whatever they want as a credit card surcharge (up to 10% in Sydney cabs) which obviously adds a rather large profit margin.

Not only do surcharges imply cash transactions don't cost the retailer anything (which is obviously false), it also can add up to a considerable amount of additional income for them. I think perhaps it would be better if the retailer was forced to display exactly what the transaction costs them and then pass that amount only onto the customer.

 

[serfty]

TT with Qantas is $7.70 per PAX per booking.

Note that although Qantas charge $7.70 for domestic bookings, 70¢ of that is GST, not so with Trans Tasman.

In a business sense, an ABN holding company can claim that 70¢ as input tax credit, then claim the remaining $7 as an expense, thereby reducing TAX by $2.10 for a nett cost of $4.90.

The TT $7.70 is purely expense, so the nett cost is $5.39.

 

[oz_mark]

Not only do surcharges imply cash transactions don't cost the retailer anything (which is obviously false), it also can add up to a considerable amount of additional income for them. I think perhaps it would be better if the retailer was forced to display exactly what the transaction costs them and then pass that amount only onto the customer.

It would be nice, but the powers that be decided that the compliance costs of ensuring this happened was too high.

 

[medhead]

Not only do surcharges imply cash transactions don't cost the retailer anything (which is obviously false), it also can add up to a considerable amount of additional income for them. I think perhaps it would be better if the retailer was forced to display exactly what the transaction costs them and then pass that amount only onto the customer.

I'm not sure it implies that, unless one hasn't followed the situation. The surcharge has always been about recovering the costs on retailers of using cards. Hence it is about recovering the extra cost, above the cost of a cash transaction of using cards.

However, the whole concept of surcharges is based on false logic. As a customer why do I care about the various costs of doing business? If we are being transparent about CC costs, why not also a surcharge for cash transactions? and for shop rental, transport costs, electricity costs?

Ohh, you say these are all the costs of doing business! Ok then all costs of doing buisness should be built into the price and we don't need any surcharges and it is transparent, if I want to buy something it costs me $X. :shock:

BTW the 10% cabcharge surcharge is probably one of the few valid cases for having a surcharge. This is because taxi fares are legislated. Providing an electronic means of payment does add costs that can't be recovered via the fare. Because the legislation doesn't allow that to happen. But then cabcharge are a big rip off mob IMO.

 

[Evan]

Cabcharge and creditcard payments are 10% in SIN also if anybody was interested. But you could always use cash or NETS (30c surcharge)

Anyway i booked a TR flight the other day and the convenince fee was $20 for 2 people, so i guess thats 4 x $5 but the worst thing was no chance to pay by Amex ??? what-tha ? no Amex, had to end up using my AU visa since i have no Singapore visa card (only Amex)

Such is life i guess.

 

[medhead]

A data point on Cabcharge from today's Financial review. Link here but it is a pay per view story.

afr.com - Sign in/out - The Australian Financial Review

Basically cabcharge have been taken to court by ACCC. It is reported that the court documents show that the cost for cabcharge to provide electronic payments has decreased from about $4mil to about $2.5 mil over the last few years. Cabcharge collect $113mil from the 10% surcharge!

 

[anat0l]

Basically cabcharge have been taken to court by ACCC. It is reported that the court documents show that the cost for cabcharge to provide electronic payments has decreased from about $4mil to about $2.5 mil over the last few years. Cabcharge collect $113mil from the 10% surcharge!

Seems rather big, don't you think?

What do they do with the money?

 

[dajop]

What do they do with the money?

ASX Code: CAB. What does any publicly listed company do with profits?