Post by Banjo on May 5, 2013 6:14:59 GMT 7
Airline extra charges costing more than fares
AIRLINE surcharges are rivalling the cost of fares as carriers eke every last dollar out from customers.
On Friday, Jetstar was levying an $8.50 ''booking and service fee'' per leg on $9 flights bought with Visa, Mastercard, Diners or American Express cards.
Last month, Tiger was adding $8.50 to $10 fares.
The imposts are increasingly infuriating would-be customers who expected card fees to drop to not much more than 1 per cent of the ticket price after the Reserve Bank of Australia (RBA) changed surcharging rules in March.
''It's just ridiculous. It's not even a percentage,'' said Eric Willma, who recently tried to book $10 Tiger fares Sydney-Mackay return for five people.
By the time he got to the payment page of the Tiger website he was up for $473 - including $85 for processing a single transaction.
''The booking fee turned out to be 85 per cent,'' Mr Willma said.
''And it's not even a booking fee - it's a credit card fee. If it was a booking fee it would also apply to Mastercard debit cards. But it doesn't.''
In a win for customers the practice is not likely to last with airlines being forced to reduce their ''booking'' fees.
The RBA has entrusted Visa and Mastercard with policing the new surcharging standards, which prohibit fees greater than the ''reasonable cost of acceptance''.
Visa is preparing lists of merchants it believes are levying over-the-odds fees.
It will provide these lists to merchants' banks in July.
The merchants will then be forced to show that their Visa fees are no more than the reasonable cost of acceptance.
Proving this will require submitting costings for scrutiny by a Visa-employed auditor.
Mastercard, meanwhile, plans to use wins with ''high profile'' merchants such as airlines to ''set the tone'' for change.
It believes customers will be paying less before year's end.
According to one source involved in the new surcharging standard, the current flat-amount fee favoured by airlines is particularly unfair on budget travellers.
''It means that business-class travellers to Perth are getting a great deal,'' the source said.
One airline told News Limited it couldn't change its flat charge because of an agreement it had with American Express that prohibited fee differentiation.
Another airline said there it had similar clause in its contract with Amex.
An American Express spokesman said: ''I can't talk about our individual contracts.''
However, the spokesman said it could not be assumed that airlines' cost of accepting Amex was higher than for Visa or Mastercard.
This is perhaps surprising given RBA data shows the average merchant service fee to Amex is 1.81 per cent compared to just 0.84 per cent to Visa and Mastercard.
The source involved in structuring the new surcharging standard said some airlines used a different excuse to justify why they couldn't differentiate fees between cards: ''They say their systems don't allow it.''
A spokeswoman for Tiger said it ''has always and will always ensure that all of its fees comply with all relevant regulatory requirements.''
Jetstar has repeatedly said that while it is aware of the new RBA standards, it doesn't have a credit card surcharge. It's a booking and service fee.
HOW FIVE $10 EACH-WAY FARES BECOME $473
$50: 5 x $10 fare frenzy fares to Mackay
$84: 4 x 20kg luggage to Mackay
$60: 1 x sports equipment to Mackay
$50: 5 x $10 fare frenzy fares from Mackay
$84: 4 x 20kg luggage
$60: 1 x sports equipment from Mackay
$85: 10 x "booking and service" fee
Total: $473
dspoverseas.proboards.com/thread/new/6
AIRLINE surcharges are rivalling the cost of fares as carriers eke every last dollar out from customers.
On Friday, Jetstar was levying an $8.50 ''booking and service fee'' per leg on $9 flights bought with Visa, Mastercard, Diners or American Express cards.
Last month, Tiger was adding $8.50 to $10 fares.
The imposts are increasingly infuriating would-be customers who expected card fees to drop to not much more than 1 per cent of the ticket price after the Reserve Bank of Australia (RBA) changed surcharging rules in March.
''It's just ridiculous. It's not even a percentage,'' said Eric Willma, who recently tried to book $10 Tiger fares Sydney-Mackay return for five people.
By the time he got to the payment page of the Tiger website he was up for $473 - including $85 for processing a single transaction.
''The booking fee turned out to be 85 per cent,'' Mr Willma said.
''And it's not even a booking fee - it's a credit card fee. If it was a booking fee it would also apply to Mastercard debit cards. But it doesn't.''
In a win for customers the practice is not likely to last with airlines being forced to reduce their ''booking'' fees.
The RBA has entrusted Visa and Mastercard with policing the new surcharging standards, which prohibit fees greater than the ''reasonable cost of acceptance''.
Visa is preparing lists of merchants it believes are levying over-the-odds fees.
It will provide these lists to merchants' banks in July.
The merchants will then be forced to show that their Visa fees are no more than the reasonable cost of acceptance.
Proving this will require submitting costings for scrutiny by a Visa-employed auditor.
Mastercard, meanwhile, plans to use wins with ''high profile'' merchants such as airlines to ''set the tone'' for change.
It believes customers will be paying less before year's end.
According to one source involved in the new surcharging standard, the current flat-amount fee favoured by airlines is particularly unfair on budget travellers.
''It means that business-class travellers to Perth are getting a great deal,'' the source said.
One airline told News Limited it couldn't change its flat charge because of an agreement it had with American Express that prohibited fee differentiation.
Another airline said there it had similar clause in its contract with Amex.
An American Express spokesman said: ''I can't talk about our individual contracts.''
However, the spokesman said it could not be assumed that airlines' cost of accepting Amex was higher than for Visa or Mastercard.
This is perhaps surprising given RBA data shows the average merchant service fee to Amex is 1.81 per cent compared to just 0.84 per cent to Visa and Mastercard.
The source involved in structuring the new surcharging standard said some airlines used a different excuse to justify why they couldn't differentiate fees between cards: ''They say their systems don't allow it.''
A spokeswoman for Tiger said it ''has always and will always ensure that all of its fees comply with all relevant regulatory requirements.''
Jetstar has repeatedly said that while it is aware of the new RBA standards, it doesn't have a credit card surcharge. It's a booking and service fee.
HOW FIVE $10 EACH-WAY FARES BECOME $473
$50: 5 x $10 fare frenzy fares to Mackay
$84: 4 x 20kg luggage to Mackay
$60: 1 x sports equipment to Mackay
$50: 5 x $10 fare frenzy fares from Mackay
$84: 4 x 20kg luggage
$60: 1 x sports equipment from Mackay
$85: 10 x "booking and service" fee
Total: $473
dspoverseas.proboards.com/thread/new/6
