VIRGIN Blue Holdings Ltd says it does not expect the “modest” 30 per cent hike on its credit card surcharge to turn people off booking flights with the airline.
Virgin Blue, Australia’s number two carrier, increased its credit card surcharge for domestic flights by $1 to $4.50 per passenger per segment just before Christmas.
It was the first increase in 18 months and was effective from December 21.
The fee applies to tickets booked on Virgin Blue, Pacific Blue and Polynesian Blue, with the surcharge for international flights going up by $1 to $7.
Virgin Blue manager corporate communications Colin Lippiatt says the decision to lift the surcharge for paying with Visa, Mastercard, American Express or Diners was not made lightly.
“From time to time Virgin Blue reviews its fee structures to ensure that it is at an appropriate level to the current economic environment,” Mr Lippiatt said today.
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“As a result of our most recent review, it was deemed necessary to implement these modest increases.”
He said he did not expect the change to harm forward bookings.
“I don’t believe it would have a significant impact,” Mr Lippiatt said.
On December 1, Qantas’s credit card surcharge for international flights increased 20 per cent to $30, from $25.
The fee for domestic flights was unchanged at $7.70 per passenger per booking.
A recent investigation by consumer group Choice on credit card surcharges found airlines were among the worst offenders in terms of the high cost of those fees.
Choice spokesman Christopher Zinn said he could see little reason for Virgin Blue’s recent hike, given the cost of processing credit card transactions – known as the merchant service fee – was coming down.
“They are becoming more and more of a gouge, particularly in airlines,” Mr Zinn said.
“We would love someone to show some leadership in this and say ‘we are going to do away with credit card surcharges, or reduce them to a fair rate’.”
While all Australia’s major airlines offered alternatives to pay that did not impose a credit card surcharge, Mr Zinn said these were neither “widely known or used”.
And figures from Virgin Blue back up that claim – the number of people using the airline’s direct debit option was in the “small single digit percentage”, with the vast majority choosing to pay by credit card.
Mr Lippiatt said the merchant service fee was just one component of the total cost of handling credit card transactions.
“Obviously there is a significant chunk which is the IT systems used for payment security to minimise credit card fraud and the other administration costs,” Mr Lippiatt said.
Mr Zinn said the flat fee used by most Australian airlines – Regional Express (REX) wes the exception – was unfair as “people on the cheapest fares cross-subsidised those people on the more expensive fares”.
Virgin Blue closed down half a cent at 43.5 cents.
Article source: http://www.perthnow.com.au/news/breaking-news/virgin-blue-defends-credit-card-fee-hike/story-e6frg133-1225978903856?from=public_rss
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