Consumers win on airline credit card surcharges

Consumers have won a decade-long battle against airlines’ sky-high card surcharges but Qantas is drags its feet complying.

ACCC chairman Rod Sims. Picture: Adam Smith

Consumers have won a decade-long battle against airlines fleecing customers with sky-high surcharges, with carriers facing massive penalties if they continue with excessive card fees.

But Qantas and Virgin have chosen to drag their feet in complying with the new rules, set to come into force in ­September, after the Australian Competition & Consumer Commission and the Reserve Bank of Australia cracked down on ­merchants’ excessive surcharges.

Flyers paying by card should now expect a charge of no more than 0.5 per cent of the total purchase, in line with the cost of processing the payment. The change means customers will be charged a fee as little as $1.50 for a $300 fare, or $5 for a $1000 fare — far below Jetstar’s current $8.50 flat fee for one-way domestic flights, Qantas’ $7 surcharge, or Virgin Australia’s $7.70 fee. International flights can attract a $30 fee.

“The age of sky-high surcharging is over,” said a spokesman for consumer group CHOICE, Tom Godfrey. “Consumers are sick and tired of being fleeced every time they pay for a flight.”

The RBA said airlines would only be able to calculate credit card fees in percentage terms, rather than as a fixed dollar amount. That should mean charg­es “on some lower-value transactions will be reduced significant­ly,” the bank said yesterday.

But Qantas and Jetstar are claiming that “it will take some time to make the necessary technology changes”. CHOICE’s Mr Godfrey said that airlines shouldn’t wait until September 1 to stop overcharging.

“Using a credit card shouldn’t be an opportunity for the likes of Qantas, Jetstar, Tiger and Virgin to profiteer at your expense. There’s no resemblance to the underlying cost to the business.”

Virgin Australia is reviewing the RBA’s mandate, and “will ensure that our fee structures comply with the new framework that will take effect on 1 September”.

ACCC chairman Rod Sims said the surcharges meant people were “ripped off” and “irritated” by the last-minute fees.