Virgin Australia reveals new credit card booking fees

By David Flynn, August 30 2016
Virgin Australia reveals new credit card booking fees
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Virgin Australia will impose a 1.3% credit card fee on bookings made from September 1, in a move which will see business class travellers on international routes paying substantially more in booking fees.

The changes are in accord with new rules on surcharging announced earlier this year by the Australian Competition and Consumer Commission and the Reserve Bank outlawing fixed surcharges which fail to reflect the actual transaction cost.

Virgin Australia currently levies a fixed $7.70 credit card fee "per person, per booking" on domestic flights, with $10 for trans-Tasman services and $30 for its international flights to Los Angeles and Abu Dhabi.

The new system will see credit card payment surcharges calculated at 1.3% of the overall airfare, with a 0.6% levy for debit cards including the Velocity GlobalWallet.

Fees will be capped at $11 for domestic and trans-Tasman fares and $70 for international tickets – the same ceilings as set by Qantas.

A Sydney-Los Angeles business class return flight with Virgin Australia currently attracts a $30 booking fee, but from September will rise to hit that $70 ceiling.

Virgin's new fee structure matches that announced by Qantas in July.

From September 1 the airline will also scrap the current booking and service fee for points-based award seat bookings, which mirrored the credit card charges for a paid ticket.

Also read: Five ways to avoid the Qantas credit card booking surcharge

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Disclaimer

Executive Traveller may receive a commission when you apply for these credit cards via our links.

You should seek independent advice and consider your own personal circumstances before applying for any financial product.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Qantas - Qantas Frequent Flyer

31 Aug 2015

Total posts 126

Well, they have to offset the loss somehow. As a Gold FF, Virgin had lost me with the last batch of changes they announced. I don't think I'll be flying Virgin anymore. The charges are ridiculous.

23 Feb 2016

Total posts 34

Who will you fly with instead? QF's fee structure is the same. 

sgb
sgb

Emirates Airlines - Skywards

30 Nov 2015

Total posts 745

Not sure how they can charge from $30 to now $70 for International, the ACCC should not be allowing such a rip off. Bring back fixed charges.

Qantas - Qantas Frequent Flyer

08 Dec 2014

Total posts 44

Hah!  This is hilarious.  Everyone complained about the fixed credit card charges saying that the airlines were gouging.  Now that they are being forced to pay what it actually costs to process these transactions you can see that the airlines were actually telling the truth when thay said that they never actually recovered all the costs with the fixed fees.

Be careful what you wish for as it can end up biting you in the a**.

That's fine. Let's work up the food chain.

  1. Why do CC companies need to charge in the first place?
  2.  Why is there a different policy for charging these fees when travel is booked ex AU versus other location. This is not unique to QF. BA and AA does the same charging the fee from their home market and each other's home market.
  3. Why do some merchants not charge the CC fee, even on high value purchases but the airline industry does? Is the fee charged by the CC companies different from the fees charged to other merchants?
  4. Why are Australian hotels the other notable exception to CC charges? Why do hotels overseas not charge these CC fees when Australian hotels do?

I think these underlying questions need to be addressed first to get to the heart of this. Looking at things in isolation with respect to the airline industry alone is insufficient.

Qantas - Qantas Frequent Flyer

30 Aug 2016

Total posts 2

The charge is not fixed at $70 though, that's just a cap. If you were to buy a standard international fare, let's say for arguments sake it's a $1500 economy seat, you'd be paying $19 in CC fees rather than the old $30.

Qantas - Qantas Frequent Flyer

20 Mar 2014

Total posts 33

You're right, though the article has been written with the assumption that the typical business traveller will fly in Business Class.

In that case, if the fare was over about $5300, then one would be up for the full surcharge amount of $70.

For VA Sydney to LA return in Business Class, the likelihood of the fare being that much or more is very high (pun intended).

sgb
sgb

Emirates Airlines - Skywards

30 Nov 2015

Total posts 745

I don't do Y.

Virgin Australia - Velocity Rewards

27 Mar 2015

Total posts 5

On the other hand, a business class ticket purchased/paid for before Sept 01/16 being total $4440.00, the charge (cc) was $30.00. After Sept 01/16 the charge will be $57.72. I suppose it will depend on where you decide to sit in the plane.

 

31 Mar 2014

Total posts 344

They could have at least been 0.1% lower than Qantas to get one up on them and have bragging rights about being cheaper

Qantas - Qantas Frequent Flyer

08 Sep 2012

Total posts 244

I haven't read the ACCC report, but perhaps the airlines are now legally obliged to charge the actual percentage imposed by the CC company (up to an agreed cap) without being able to 'undercut' their competitors by offering a slightly lower percentage charge (which QF would probably match anyway).

Charging CC fees is good for transparency on the one hand but also creates a whole lot of resentment when people don't feel they should be paying them.

I believe that CC fess are a business cost and should be absorbed rather than passed on to customers. And to those that say this would only lead to higher fares for those paying cash, I'd respond by saying that most business already factor in the cost of credit to their pricing. These surcharges are pure profit, particularly for fares over about $200.

KB3
KB3

31 Aug 2016

Total posts 2

The alternative is to use cash. The cost to any business to process a cash transaction is huge. Can you imagine how much it would cost Virgin to set up ticket offices so that people could pay by cash? The labour costs on collecting the cash and then banking it is huge. As a consultant I worked on the Telstra Transformation project which removed cash transactions from their business and forced customers to pay by credit card. It saved Telstra millions upon millions of dollars. It saves Airlines money if their customers use credit cards and yet the Government allows them to levy a credit card transaction fee.

Virgin Australia - Velocity Rewards

31 Aug 2016

Total posts 2

What is the position of Australian Airlines toward Paypal and the like?


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