Bye Bye to the big airline fee rip-off - Clive Dorman article

[AdMEL]

A few interesting things:

- comments have been quickly closed!
- Tiger has recently increased their fee from $7 per flight to $8.50
- From March 18 credit card surcharges must effectively reflect the cost (I haven't seen this stated previously, i.e. the date, or that was the ruling)
- My suspicion is that the airlines will try and get away with continuing the fees, as they have changed the name to booking and service fees!

Bye-bye to the big airline fee rip-off

 

[anat0l]

I'm sure there's a topic around here that's talking a similar thing, but this is the first article I've seen that mentions the new rules, albeit this is an opinion article.

It'd surely be nice for the fees to drop, but I smell swings and roundabouts for a new system anyway.

For example, what if instead of a fee, they changed tack and said, "We'll offer a $10.00 discount if you pay with BPay or Debit Mastercard", but the airfares went up anyway?

They could just go for blanket % fee, which will have more of an impact on international fares, particularly for, say, families.

The nicest thing would be just to abolish any fee, of course.


The next target, I'd assume, would be attacking airlines who charge Aussies more for the 'same route' than we do international customers.

 

[harvyk]

For example, what if instead of a fee, they changed tack and said, "We'll offer a $10.00 discount if you pay with BPay or Debit Mastercard", but the airfares went up anyway?

I suspect it will be legal, provided you advertised the airfare as "$99 gets your bum in seat" rather than "$89 if paid via BPay gets your bum in seat". You could put as a star next to the price stating that a $10 discount will be applied if paid via BPay, but that is the limit of what I expect you could do.

You would need to make it clear that a discount for a certain payment method is being applied, and you would need to be very clear that if you do pay via CC that you are not been penalized as you are getting the advertised fare. Your systems would need to also apply the discount to the fare after BPay it has been selected, not apply the discount until CC is selected.

 

[Daggs01]

It was a ruling by the Reserve Bank last year that merchants could only pass on the exact fee they are being charged.

This was to avoid double dipping where sometimes a 3% surcharge is applied despite the merchant being on 2%

 

[oz_mark]

It was a ruling by the Reserve Bank last year that merchants could only pass on the exact fee they are being charged.

This was to avoid double dipping where sometimes a 3% surcharge is applied despite the merchant being on 2%

Not quite. They will be allowed to charge 'reasonable cost of acceptance'. (see the Guidance note for what is and what is not reasonable: RBA: Guidance Note: Interpretation of the Surcharging Standards - November 2012)

 

[AdMEL]

Not quite. They will be allowed to charge 'reasonable cost of acceptance'. (see the Guidance note for what is and what is not reasonable: RBA: Guidance Note: Interpretation of the Surcharging Standards - November 2012)

Thanks for the link, oz_mark. I knew that the RBA was reviewing credit card surcharges and the review was at or near completion, but the article I linked is the first I've seen of the outcome and effective date.

 

[haydensydney]

I wish they just included the credit card fee within the airfare so we could be done with it...

 

[whatmeworry]

However, a percentage fee on more expensive international fares could see the price increase. For example, instead of the current flat fee of $30 for Qantas international tickets bought with a credit/debit card in Australia, a 2 per cent fee on a $2000 fare would increase the price to $40.
The bottom line, however, is that what is actually now being banned is lying. Nothing is a bigger insult to an average person’s intelligence than being told naked price-gouging is a reasonable fee for service.
It will be hard for the airlines to give up such gouging when many of their new ancillary fees – baggage fees, seat selection, priority boarding – are charges for services that cost next to nothing to produce.

2 good points by the journalists. One is that the CC fee might make it more expensive then a flat fee.

Secondly, CC fees among other services that they charge a fee, cost them next to nothing yet we forced to pay if you don't have status.

 

[anat0l]

Secondly, CC fees among other services that they charge a fee, cost them next to nothing yet we forced to pay if you don't have status.

I wish status exempted or even lowered the credit card fees one must pay!

 

[whatmeworry]

I wish status exempted or even lowered the credit card fees one must pay!

Good idea, That would be a good perk for gold and above! QF and VA should seriously look at that as a selling point.

 

[JohnK]

Somehow I think the airlines will continue with credit card surcharges as that is a nice way to fund bonuses and staff Christmas parties without affecting the bottom line.

For example, what if instead of a fee, they changed tack and said, "We'll offer a $10.00 discount if you pay with BPay or Debit Mastercard", but the airfares went up anyway?

I think that is fine and what most of us have been saying all along. At least that way you see the "real" airfare up front and not after going through 5 confirmation screens and if you chose to use BPay or Debit cards then you get a discount not a surcharge.

 

[Hvr]

A few interesting things:

- comments have been quickly closed!
<snip>

Bye-bye to the big airline fee rip-off

Comments were still open several hours after your post.

Re CC fees, I think this will promote greater transparency but as has been noted if they are a percentage then they may rise. I reckon any big user, e.g. Qf, who cannot negotiate a discount isn't trying. Especially when they have card tie ups with many companies, for example Westpac Earth where you get double points for a Qf purchase (if they ever come through!). And of course the various Amex cards with even greater points.

One thing with other methods of payments is that you lose a bit of consumer protection, especially if the company goes broke. When you pay with a credit card you can easily get a refund.

 

[codash1099]

Does the Reserve Bank really think they can get the Genie back into the bottle (or the cat into the bag)? How naive.

The airlines will just find some other way around it. Qantas is not going to give up $100 million (reported) income.

 

[anat0l]

Does the Reserve Bank really think they can get the Genie back into the bottle (or the cat into the bag)? How naive.

The airlines will just find some other way around it. Qantas is not going to give up $100 million (reported) income.

That's why I was thinking a "discount" approach rather than a surcharge one, with a resulting increase in the headline fare (e.g. by $10 domestic / short haul and $30 international).

People will catch on quickly that this is the same as before, so although it's a subtle switch from stick to carrot, I'm curious to see what would be the reaction.

Another way around it is to completely embed the YR charge of old into the YQ (fuel surcharge), thereby making it "competely unavoidable" and even more obfuscated rather than transparent.

 

[eastwest101]

Another way around it is to completely embed the YR charge of old into the YQ (fuel surcharge), thereby making it "competely unavoidable" and even more obfuscated rather than transparent.

Thats what I suspect will happen too.

 

[oz_mark]

That's why I was thinking a "discount" approach rather than a surcharge one, with a resulting increase in the headline fare (e.g. by $10 domestic / short haul and $30 international).

Even before surcharging was permitted, businesses always had the option of providing a discount for cash. Very few ever did so....

 

[Carlous Moochous]

I'm not convinced the RBA's changes will lead to any real material benefit to airline bookings.. I'm a slight sceptic, but the way that many media outlets have picked this up they have made it sound like its the best thing since sliced bread. I wrote a blog post about it which again is too long to post on here so I'll leave a link: InNews: The Future of the Credit Card Surcharge

The only real way to get transparent is to remove the surcharge - if that means airfares go up buy a few bucks, then so be it. We all pay by cards to get the points anyway!

 

[drron]

I am inclined to believe this will make no difference to airline charges.it will also make no difference to hotel surcharges.Hopefully a few restaurants and their 5% CC surcharge will be pulled into line.I just dont think this will make a significant difference to my finances.

 

[anat0l]

I am inclined to believe this will make no difference to airline charges.it will also make no difference to hotel surcharges.Hopefully a few restaurants and their 5% CC surcharge will be pulled into line.I just dont think this will make a significant difference to my finances.

I don't think it'll make much difference to anyone's finances, period. People have put up with this for a long time and frankly if people were really passionately against it,

• Litigation should have happened much earlier
• There would have been a much more pronounced use of fee-free payment methods
• These changes would've occurred much, much earlier, with a lot more gusto and affirmative action

Sure, we will be "counting" the savings and reflecting on the achievement, but why should we applaud ourselves when this whole change process has been so passive, if there will actually be change?

Consumer advocates like Choice are not much better. They "pride" themselves on being a consumer voice, and they will surely take credit for this "progress", but ultimately they are extremely self-serving and I would be very surprised if they honestly cared about the consumers that they are trying to be a voice for.

 

[codash1099]

We can all stop complaining. I was booking a car from LHR to my hotel and they wanted to charge 11% extra for using a card. Not bloody likely!!