A radical shake-up in the way Australian airlines sell tickets online is on the way from September 1, 2016, after the national government followed Europe in banning profiteering on credit card transactions.
Fees as high at $8.50 for a one-way sector will be abolished in favour of a percentage capped by the Reserve Bank of Australia (RBA) on Thursday at 0.8 per cent of the value of the transaction.However, the difference is not expected to be passed on to travellers in lower fares as the airlines simply change the definitions in their charging systems to maintain their existing levels of so-called ancillary fees.
Without such revenue, estimated at $US59 billion globally in 2015, the airline industry would not be profitable.
The Qantas group was first to respond to the new charging limits hours after the RBA published its final response to an 18-month investigation of Australia’s credit card system.
“Both Qantas and Jetstar plan to move to percentage-based card payment systems, as the standards require,” Qantas says in a statement. “It will take some time to make the necessary technology changes, and we’ll provide further details about the new policies closer to the time of implementation.
“We would expect regulators to make sure the new rules are applied fairly to all carriers that sell tickets in Australia, not just Australian airlines.”
The airline says the Qantas group has been closely involved in consultation on the new RBA standards, “so the changes are largely in line with our expectations”.
“They allow merchants like Qantas to continue recovering some of the significant, fixed costs that come with enabling payments by card.”
However, that appeared to be a concession that the airline could not hope to recover the full cost of card transactions under the new regime.
“Qantas currently charges a fixed-fee credit card surcharge of $7 for domestic bookings and $30 for international bookings. This recovers about 80% of Qantas’ related costs and has never been a source of profit,” it says in today’s statement.
“Jetstar does not surcharge but has a fixed booking and service fee of $8.50 per domestic flight and $8.50 – $12.50 per international flight for some payment methods, including credit card.
“Both airlines offer a range of fee-free payment options and will continue to do so under the new rules.”
That would appear to conflict with statements to AirlineRatings.com about the new consumer laws by the chairman of the Australian Competition and Consumer Commission, Rod Sims, earlier this year.
“If the fee charged is conditional on the form of payment, then it’s clearly covered [by the Competition and Consumer Amendment (Payment Surcharges) Bill 2015, which passed the Australian parliament in February],” Sims said.
He warned companies applying surcharges not to be “too cute”.
Even though the RBA’s new credit card rules will apply from the beginning of the next financial year on Friday, July 1, 2016, the ACCC says it will not begin enforcement until Thursday, September 1.
“The ACCC is finalising online guidance material for consumers and businesses, which will provide further information on the ACCC’s enforcement role, what businesses need to do in order to comply, and how consumers can make complaints if they believe a business has charged a payment surcharge that is excessive,” Sims says.
“We will focus on education and awareness in the early stages but won't turn a blind eye to possible breaches, particularly for those large businesses clearly on notice of these changes
- See more at: http://www.airlineratings.com/news/692/air-fares-shakeup-on-the-way-as-australia-bans-big-card-fees#sthash.
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