Qantas defends credit-card ‘surcharge’ as being a ‘comfort fee’

QANTAS has told a Reserve Bank review its low-cost offshoot Jetstar’s $8.50 fee for using plastic is not a credit-card surcharge but rather a “comfort” cost, like paying extra to sit in the exit row.

SYDNEY, AUSTRALIA - JUNE 21: Passangers wait at a Qantas departure gate as airlines cancel flights due to volcanic ash at Sydney Domestic Airport on June 21, 2011 in Sydney, Australia. Air travel across the country is being disrupted again, as a result of volcanic ash cloud from Chile inundating Australian air space. Sydney, Adelaide, Canberra and Melbourne airports have been affected, with all major airlines announcing cancellations. It is expected Brisbane airport will next be affected as the cloud travels over the east of the country. (Photo by Ryan Pierse/Getty Images)

QANTAS has told a Reserve Bank review its low-cost offshoot Jetstar’s $8.50 fee for using plastic is not a credit-card surcharge but rather a “comfort” cost, similar to paying extra to sit in the exit row.

And, in contrast to claims it makes a fortune from card fees, the Flying Kangaroo insists it is losing money.

The Reserve Bank of Australia is considering whether to tighten card payment regulations after the Federal Government’s Financial System Inquiry (FSI) got 5000 submissions on surcharges, nearly four times the volume of correspondence on the rest of the financial system put together.

Airlines are considered the chief exponents of excessive surcharging.

In 2012, consumer watchdog Choice estimated Qantas was reaping $100 million more than its cost of accepting card payment.

But Qantas says it’s not guilty.

‘NO CREDIT CARD SURCHARGE’

“Qantas significantly under-recovers its total cost of card acceptance through its card payment fees,” it said in its submission to the RBA review.

The airline group added: “Jetstar does not levy a credit card surcharge.

“Jetstar’s Booking and Service Fee (BSF) is a market based fee. It is not a cost recovery mechanism for a type of card payment and is not correlated to costs associated with credit cards,” Qantas said.

“The BSF is one of a variety of fees applicable in addition to Jetstar’s basic ticket price that allow its customers to choose the level of comfort and convenience they desire.”

‘BLATANTLY MISLEADING’

However, the man who started a petition against Jetstar’s surcharge — which has now been signed by more than 100,000 people — said that Qantas’s claim was “blatantly misleading”.

Gold Coast businessman Klaus Bartosch said: “Consumers aren't stupid. We understand what these fees really are.

“This is blatantly misleading. I’m flabbergasted that Qantas would make such a claim to the RBA.”

Qantas’s competitor Virgin, which owns Jetstar rival Tiger, did not make a submission to the review.

Review submissions from consumer groups do not support the FSI recommendation for a tiered system of surcharging, under which only a low fee could be imposed when using a standard card. Choice said the better solution was to arm a regulator with the power to enforce the existing rules meant to limit fees to the “reasonable cost” of processing payments.