Airline surcharges; how do they get away with it!?…

buildingquoteHQ 1 March 2012 24

Whinge of the day warning!!!

When booking airfares on-line, as most of us do these days, we get slugged exorbitant fees on top of the airfare. Can anyone give me a plausible reason why?… other than cause they can!

Virgin are charging $4.50 per guest per sector! So for a family of 4 to travel return to Noosa for example (via Sydney or Brisbane) the credit card surcharges on top of the flights costs amount to $72!

Qantas charges $7.70 person, or $61.60 for a family of 4 to travel return to Sydney (at least they don’t charge per sector… yet!)

Bare in mind this payment is made in one transaction; so how is the number of people travelling or how many sectors they fly relevant? I understand that service providers need to cover their costs but surely this is just taking the piss!


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24 Responses to Airline surcharges; how do they get away with it!?…
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Bramina Bramina 6:36 pm 03 Mar 12

thatsnotme said :

Bramina said :

The truth is that airlines are far and away the least profitable industry (well in Australia they are slightly profitable, but pretty much everywhere else they run at a loss).

A large part of the reason for this is that passengers screw airlines over big time (instead of airlines are screwing over passengers).

Yep, every time I buy a ticket to fly, head out to the airport, board the plane and take my seat for the flight to my chosen destination, I think ‘screw you airline, I win yet again!!’

Care to provide any actual examples of how passengers are screwing the airlines over? Is expecting the aircraft to take off AND land unreasonable? I’d just like to know why it’s in fact the passengers to blame for all of this?

Customers are very price sensitive – most consumers go online and choose whatever ticket happens to be cheapest even if it is below cost price (i.e. screwing the airline over).

The airlines are selling essentially the exact same product. They don’t have much ability to differentiate their products – people are basically buying a seat from point A to point B. All airlines fly from the same airports at the same speed.

Australia is a bit less competitive, so Airlines are slightly more profitable. The surcharge is a good trick for the airlines (not for the customers). People in the know can easily get around it, people who don’t know wouldn’t change their business because of the surcharge anyway.

Airlines are also hard pressed by their suppliers. They buy the same fuel and the same (or similar) planes. Some airlines also have unionised staff who screw them over for wages as well (Qantas).

We get royally screwed by lots of businesses, but airlines are not one of them.

dvaey dvaey 1:08 pm 03 Mar 12

schmeah said :

Does that fee amount to $7 if I buy 1 item and $14 if I buy 2? Sure, I’ve seen the signs at SOME stores; ‘using AMEX attracts a 2% surcharge’ .. but the airlines are just taking the piss.

I think the fee is around 3%, meaning that for a $4.50 charge, if your fare costs less than $150 then they make a profit off the difference between 3% and $4.50. If your fare costs more than $150, then they absorb the difference (or it is offset by the fares they make a profit on).

I guess it would be like if a fast-food delivery store added an extra $3 onto every order and offered free delivery, instead of charging $6 for delivery and no extra for pickup.

If you want to save the $6, then get it yourself … if you want to save the $4.50 then use a payment method which has fees attached to it.

Deref Deref 8:19 am 03 Mar 12

How do they get away with it? Simple: inadequate consumer protection laws, inadequate policing of those that exist and inadequate penalties for breaches.

Airlines, like anyone else, can charge whatever they like – but this is intentionally deceptive.

Evil_Kitten Evil_Kitten 11:53 pm 02 Mar 12

Simmo said :

$4.50 per sector may be close to the visa cost of about 2% if you are traveling first class, but for the majority of people travelling domestic routes it is a rip-off. I thought I’d try paying by Bpay with Virgin recently but their system is not up to working with a Mac computer. So you have to pay with a credit card. But since you have wasted your time trying to pay by CC they will then refund the $4.50 CC charge. However that involved a frustrating thirteen minute phone conversation to a call centre in a far-off country. Not really worth the call.

What was the issue on the Mac?

I have paid via Bpay on my Mac, but it was with Qantas.

buildingquoteHQ buildingquoteHQ 9:08 pm 02 Mar 12

watto23 said :

I recently booked a flight through a travel agent. I got them to match the airfare. they charged 2% which on $2k is $40. reasonable i would say for such a fare. As opposed to the per sector/per person pricing which is not reasonable, as it doesn’t reflect the costs to the airline. The CC company doesn’t charge them per sector/person and thats the real issue. They are using it to make money while advertising as low a fare as they can. Its a loophole ever since they were made to includes taxes in the advertised fare.

Nailed it!

watto23 watto23 1:11 pm 02 Mar 12

I recently booked a flight through a travel agent. I got them to match the airfare. they charged 2% which on $2k is $40. reasonable i would say for such a fare. As opposed to the per sector/per person pricing which is not reasonable, as it doesn’t reflect the costs to the airline. The CC company doesn’t charge them per sector/person and thats the real issue. They are using it to make money while advertising as low a fare as they can. Its a loophole ever since they were made to includes taxes in the advertised fare.

schmeah schmeah 10:15 pm 01 Mar 12

AKT said :

schmeah said :

winter said :

I don’t really mind the credit card surcharge, after all they do get slugged with a hefty cost from visa/mastercard/amex.

so why can I use my credit card for every other transaction under the sun, online or otherwise and not have to part with $15 for a single purchase for 1 or 2 people?

Fools and their money are easily parted. You’re better off just Bpaying it .. it’s free (Air Aus bust aside).

All retailers who utilise Visa/MasterCard services get charged a fee by the relevant banks for this privelage. Some retailers opt to absorb this fee, whilst others choose to pass this on to the consumer

Does that fee amount to $7 if I buy 1 item and $14 if I buy 2? Sure, I’ve seen the signs at SOME stores; ‘using AMEX attracts a 2% surcharge’ .. but the airlines are just taking the piss.

thatsnotme thatsnotme 9:35 pm 01 Mar 12

Bramina said :

The truth is that airlines are far and away the least profitable industry (well in Australia they are slightly profitable, but pretty much everywhere else they run at a loss).

A large part of the reason for this is that passengers screw airlines over big time (instead of airlines are screwing over passengers).

Yep, every time I buy a ticket to fly, head out to the airport, board the plane and take my seat for the flight to my chosen destination, I think ‘screw you airline, I win yet again!!’

Care to provide any actual examples of how passengers are screwing the airlines over? Is expecting the aircraft to take off AND land unreasonable? I’d just like to know why it’s in fact the passengers to blame for all of this?

Bramina Bramina 9:23 pm 01 Mar 12

The truth is that airlines are far and away the least profitable industry (well in Australia they are slightly profitable, but pretty much everywhere else they run at a loss).

A large part of the reason for this is that passengers screw airlines over big time (instead of airlines are screwing over passengers).

allyroger allyroger 8:18 pm 01 Mar 12

I really feel strongly about this, to me its a cost of doing business. Check Virgin America or Virgin Atlantic and see what cc fees they charge. Zippy. Its against visa’s terms in the US to allow surcharges and when i lived in the US i never once got charged a surcharge anywhere. I also lived in the UK and again, yet to encounter a cc surcharge. Its just another example of the ACCC doing a terrible job for Aussie consumers. Don’t make me start at HN’s 0% financing offers (and all their hidden fees and different pricing) compared to what is offered in other countries.

Simmo Simmo 6:20 pm 01 Mar 12

$4.50 per sector may be close to the visa cost of about 2% if you are traveling first class, but for the majority of people travelling domestic routes it is a rip-off. I thought I’d try paying by Bpay with Virgin recently but their system is not up to working with a Mac computer. So you have to pay with a credit card. But since you have wasted your time trying to pay by CC they will then refund the $4.50 CC charge. However that involved a frustrating thirteen minute phone conversation to a call centre in a far-off country. Not really worth the call.

AKT AKT 6:01 pm 01 Mar 12

schmeah said :

winter said :

I don’t really mind the credit card surcharge, after all they do get slugged with a hefty cost from visa/mastercard/amex.

so why can I use my credit card for every other transaction under the sun, online or otherwise and not have to part with $15 for a single purchase for 1 or 2 people?

Fools and their money are easily parted. You’re better off just Bpaying it .. it’s free (Air Aus bust aside).

All retailers who utilise Visa/MasterCard services get charged a fee by the relevant banks for this privelage. Some retailers opt to absorb this fee, whilst others choose to pass this on to the consumer

schmeah schmeah 5:12 pm 01 Mar 12

winter said :

I don’t really mind the credit card surcharge, after all they do get slugged with a hefty cost from visa/mastercard/amex.

so why can I use my credit card for every other transaction under the sun, online or otherwise and not have to part with $15 for a single purchase for 1 or 2 people?

Fools and their money are easily parted. You’re better off just Bpaying it .. it’s free (Air Aus bust aside).

Mess Mess 3:32 pm 01 Mar 12

The Virgin site means per one way flight. So Canberra-Brisbane-Noosa is counted as a one way flight as it is a through connection, you will only get charged $4.50 for that.

buildingquoteHQ buildingquoteHQ 1:56 pm 01 Mar 12

Mess said :

I think you may have done something wrong here. Virgin charge credit fees one way. So if you booked the flights as a through fare, eg Canberra-Sydney-Noosa, that would a $4.50 charge, and then $4.50 for the way home, $9 per person, so for a family of four that would be $36.

Credit card companies charge a percentage of of the amount of transaction in fees (usually around 1-2%), and airlines can’t absorb this cost, so they pass it onto the customer. So rather than charge you a percentage, they charge a fixed fee. Sometimes this will work in your favour, sometimes it won’t.

I’m not so sure; this is from the virgin website…?
“If making payment with a credit or debit card, a surcharge of 4.50 AUD per Guest per sector will be added to the total price of your booking at payment”

Thanks others for the BPay tip!

milkman milkman 1:47 pm 01 Mar 12

Welcome to the free world. Don’t like it? Don’t fly.

Mess Mess 1:16 pm 01 Mar 12

I think you may have done something wrong here. Virgin charge credit fees one way. So if you booked the flights as a through fare, eg Canberra-Sydney-Noosa, that would a $4.50 charge, and then $4.50 for the way home, $9 per person, so for a family of four that would be $36.

Credit card companies charge a percentage of of the amount of transaction in fees (usually around 1-2%), and airlines can’t absorb this cost, so they pass it onto the customer. So rather than charge you a percentage, they charge a fixed fee. Sometimes this will work in your favour, sometimes it won’t.

dvaey dvaey 1:13 pm 01 Mar 12

BallOfMonkey said :

Similar to movie theatres charging $1 fee per ticket to book online. Someone needs to explain to me why I should pay them for the privelage of doing their job for them.

Ticketek now has email delivery of tickets, at a cost of $7.60 .. the same charge as opting to receive the tickets by registered post.

Also makes me think of movie cinemas that charge a $3 surcharge for a 3D movie, then an extra $1 on top for the disposable glasses. Im surprised they dont offer unpopped popcorn, then offer it popped for only an extra $2.

As for why you have to pay a surcharge percentage if you use a credit card, just google for Interchange Fees.

BallOfMonkey BallOfMonkey 12:38 pm 01 Mar 12

Similar to movie theatres charging $1 fee per ticket to book online. Someone needs to explain to me why I should pay them for the privelage of doing their job for them.

winter winter 12:29 pm 01 Mar 12

I don’t really mind the credit card surcharge, after all they do get slugged with a hefty cost from visa/mastercard/amex.

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