Around the world, airlines rake in hundreds of millions of dollars every year charging for everything from a second checked-in bag to printing your boarding pass. Reservation changes in the U.S. alone brought in an extra US$2.38 billion in 2011, for example.
But a select few stand out for continuing to charge extra for paying with a credit card, despite a worldwide attempt to curb the practice and save consumers millions in the process.
Qantas has reportedly made a cool $204 million from charging credit-card-using customers $7.70 for domestic and $30 for international flights, according to consumer advocacy group Choice. Earlier this year, the RBA has given credit card companies free reign in curbing such fees to what it actually costs to process the payment – ranging from 0.8 to 3 per cent. But Qantas CEO said he did not think the rules apply to them.
Budget airline Jetstar charges $8.50 for credit card purchases on domestic flights and $12.50 on long haul international flights, irrespective of the purchase price – which often translated to the equivalent of an extra 20 per cent on a low-cost ticket. In April, a Gold Coast businessman started a Change.com petition demanding that the company drop the fees. Once he got 35,000 signatures, he printed them and made a paper airplane to deliver to the company’s Melbourne headquarters. Jetstar’s response? ‘While Jetstar doesn’t have a credit card surcharge, we are aware of the new RBA standard applying to Card Schemes.’ Apparently, because it’s ‘a booking a service fee’.
Air New Zealand
Air New Zealand is under investigation for its credit card fees, the second time in a year in potential breach of the Fair Trading Act. It charges $4 credit card surcharges per person on domestic flights – but that rises to $6 for trans-Tasman and short-haul Pacific flights, to $12 for a jaunt to Bali, and $17.50 if you want to get out of the Pacific entirely. A NZ Air spokesman said that the airline spent $20.5 million on merchant service fees and recoup just $19.1 million of it.
The United Kingdom’s Office of Fair Trading has also issued rules protecting consumers from surcharges on such budget airlines as RyanAir, EasyJet and Aer Lingus, after calculating that it cost consumers around £300m annually. As of April 6, however, UK companies are explicitly banned from imposing ‘excessive charges’. Britain decided to bring the ban a year before an EU-wide regulation.
The ban, however, could not foil the clever budget airlines – who now charge ‘administration fees’ rather than credit card fees. Nonetheless, of the three budget airlines, only Aer Lingus does not impose any additional fees for using credit cards – it merely charges a €7 / £7 admin fee. But it does charge a separate security surcharge – and heaven forbid you miss your flight or check in late (£75 fee).
EasyJet now charges a £10.00 ‘administration fee’ on all bookings. But not to worry – credit card payments will incur an additional 2.5 per cent fee. Furthermore, while flight transfers and name changes to exiting bookings are free for some credit and debit cards, it will cost another 2.5 per cent to anyone daring to pay with a Visa, MasterCard, American Express or Diners Club.
Not to be outdone by EasyJet, Ryanair has also introduced an ‘admin’ fee since the April ruling by UK’s OFT. Perhaps because it is more budget than EasyJet, however, its admin fee is a mere £6 – and a credit card payment incurs just a 2 per cent additional charge. If you’re curious, however, do check out all the other fees hidden in the middle of its Terms and Conditions page (such as €70/£70 to reissue a new boarding card).