Qantas denies pocketing $100 million from card surcharges

QANTAS has hit out at claims it rakes in millions from charging passengers to use their credit or debit cards to book flights.

Consumer watchdog Choice has estimated the airline rakes in approximately $100 million in profit every year from the credit card surcharges.

It comes as the Reserve Bank of Australia meets today to decide on whether to introduce new surcharge limits that would more accurately reflect the true cost of processing a credit card payment.

Choice estimates Qantas made $204 million in revenue from these surcharges from the 12 months up to February this year, and claims it has kept over half of that amount in its pocket.

“Our analysis shows that the Qantas group may be charging consumers at least $100m more each year than it needs under the guise of covering processing costs,” Matt Levey, Choice’s Head of Campaigns, said.

Card surcharges imposed by airlines are one of the biggest sources of complaints to the Australian Competition and Consumer Commission and Australia's state-based consumer affairs departments.

Qantas charges $7.70 to use a credit card to book domestic flights and $30 for international flights. The fees are charged per passenger per ticket regardless of whether the ticket is one-way or return.

Choice has written to Qantas CEO Alan Joyce to ask for clarity around the real cost of processing credit card payments as Qantas does not disclose this information.

A Qantas spokesperson has denied that it makes a profit from the surcharges.

“Qantas does not collect more in surcharges than it costs us to offer credit cards as a payment option,” the Qantas spokesperson said.

“We also provide customers with alternatives to using credit cards.”

Choice’s calculations were based on monthly traffic and capacity statistics for the 12 months to February this year. They were compared with the amount passengers are charged to use their cards and the average merchant service fee paid by all merchants in Australia – which is 0.86 per cent for Visa and Mastercard payments.

The frequency of one-way flights compared to return flights has also not been disclosed by the airline and was calculated based on industry estimates of 30 per cent to 70 per cent.

Qantas was one of the first major Australian businesses to impose credit card surcharges following the Reserve Bank of Australia’s move to allow such charges from 1 January 2003.

It was awarded a Shonky award by Choice in 2009 for the $7.70 surcharge.

Airline credit card fees

Virgin Australia: $4.50 per person, per sector for domestic flight bookings

Tiger Airways: $7.50 per person per sector

Jetstar: $30 booking fee for domestic flights, $40 international

Qantas: $7.70 per person on domestic flights and $30 international flights.