When it comes to airline fees, you’ve probably stopped asking yourself, “What’s will they think of next?”
That’s because you thought they’d stop with charging for the first checked bag. But they didn’t. You thought paying for lunch on a six-hour flight was where they’d draw the line. Nope. How about seat reservations — surely they’d be included in the ticket price? Sorry.
So if I told you that you’d soon have to pay for the privilege of paying, that probably wouldn’t sound like a joke. But when I heard from Will Storr, a fellow journalist who lives in England and who had booked flights from Florence, Italy, to London on British Airways, I thought there was some kind of mistake.
Storr was broadsided with a total of $28 in mysterious fees. Like any good journalist, he investigated and found they were credit card fees levied directly by the airline. He says he feels as if the airline “helped itself” to more of his money even after quoting a lower fare through an online travel agency.
Charging customers to pay is highly unusual. In the United States, only one airline, Allegiant, does it. It cleverly avoids the term “credit card fee” because that would violate Visa’s credit card rules and is illegal in 10 states. Instead, it calls them “convenience” fees.
For the convenience of using any of Allegiant’s booking services (inclusive of call center) there is a fee of $17.00 per traveling customer. Purchases made at any of Allegiant is Airport Ticket Offices will not incur a Convenience Fee of $17.00 per customer. All fares are subject to change until confirmed and purchased.
Got that? If you buy a ticket anywhere except the Allegiant ticket office, you have to pay a $17 fee per customer.
European airlines have no such restrictions. For years, no-frills discount airlines have added these credit card fees to their ticket prices. But now the larger air carriers like like British Airways, Lufthansa and Swiss are catching up.
It’s easy to understand why airlines would want to pass the cost of merchant fees along to passengers. They can represent up to two percent of their ticket distribution costs, and at a time when every penny counts, a two percent savings is nothing to sneeze at.
In order to understand how European airlines are rationalizing this decision to us, their passengers, let’s have a look at the recent announcement by Swiss that it would begin imposing a $24 ticketing fee for customers who pay by plastic.
Credit card holders enjoy benefits that extend beyond the ability to make secure non-cash payment. Depending on the card product, such benefits include an extended deadline for settlement of payment and/or the provision of insurance services. Recent years have seen a rise in the related costs, which Swiss has hitherto borne. The introduction of the Optional Payment Charge represents a distribution of the costs on a user-pay basis.
Aha. So Swiss is making the argument that paying by credit card is somehow better, and that customers should be paying more because of it. But isn’t that what your annual fee is for?
Another issue is whether the new fees cover the airline’s cost, or whether they are a source of profit. I think we all know the answer to that one. Airlines aren’t just going to cover their costs; these new fees are certain to become significant source of revenue.
Already, the UK’s Office of Fair Trading has weighed in on this issue, saying it believes there’s “a strong case for a change in the law so that the cost of using a debit card, the almost universal payment method for today’s online consumers, is always included within the headline price.” It is investigating complaints about credit card usage fees.
There are fears that these fees could spread to the United States. Any halfway competent airline revenue manager must be looking across the pond with envy, hoping that the European courts let the fees fly. If they do, they could pave the way for a more widespread acceptance of credit card fees here, and with a little linguistic acrobatics — referring to the surcharge as a “convenience” fee — it’s not inconceivable that a major domestic airline could embrace these surcharges soon.
There are just two small problems, as I see it. First, the airlines charging these fees are being dishonest with themselves and with us. The fees don’t just offset their ticket distribution costs — in almost every case, they also enhance their profits. They make their tickets look cheaper than they actually are.
If cards are too expensive for an airline, then shouldn’t they either stop accepting them or raise their fares? Of course.
My second concern is where this will end. If you’re allowed to charge for using a credit card, can a fee to cover employee salaries, insurance, benefits union dues — or, heaven forbid, CEO bonuses — be far behind?
(Photo: Decla /Flickr)