New airline credit card surcharges: how much less will you pay?

Angus Kidman 1 September 2016

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For a typical airline fare, there's a major reduction.

From today, airlines (and any business earning more than $25 million a year) can no longer impose excessive surcharges for customers paying by credit card. That's good news for frequent flyers (count me guilty), but just how much difference will it make?

We've already reported the changes that have kicked in for Qantas, Virgin Australia, Jetstar and Tigerair. To set those in context, I set out to answer the question: what would the credit card surcharges have been prior to today for a $250 return domestic flight on each of those airlines, and what will they be from today? Here's the answer:

AirlineOld chargeNew charge VisaNew charge Mastercard
Qantas$7.00$3.25$3.25
Virgin$7.70$3.25$3.25
Jetstar$17.00$1.20$2.65
Tigerair$17.00$3.33$3.13

The biggest difference is for the low-cost carriers, Jetstar and Tigerair, who previously charged a fee for each sector you booked. If you'd paid for this flight on Jetstar using a Visa card yesterday, it would have cost you more than 14 times as much as it will today. The differences are less apparent with Qantas and Virgin, but the cost is still less half what it was.

To be clear, there are contexts where you might pay more. As I noted when Qantas announced its charges, customers on domestic flights that cost between $539 and $846 will pay a little more. For international flights, anything between $2,309 and $5,385 actually attracts slightly higher fares. But for domestic customers the news is good.

There are still tactics you can use to reduce the surcharges (debit cards are slightly cheaper on the bargain airlines) or reduce them altogether (paying using BPAY or POLi, or using an airline-issued credit card). That's worth doing when you can, but cutting fees in half or more is still a very welcome development. Excuse me, I'm off to book some flights I've been holding off on . . .

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.

Airline credit card surcharges: what's changing

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2 Responses

  1. Default Gravatar
    GarySeptember 1, 2017

    Does this mean that companies who previously did NOT charge for using a credit card, say over $10, will now charge for ALL purchases whether over $10? I understand they can not charge more than their costs but how does the customer know what their charges are?

    • Staff
      LiezlSeptember 2, 2017Staff

      Hi Gary,

      Thanks for your question.

      While there are merchants who don’t pass on the acceptance cost to their customers, businesses that accept payment for goods or services by a debit or credit card have the right to impose payment surcharge to their customers. It’s also worth noting that different businesses have different costs of acceptance, nevertheless, they must all adhere to the RBA guidelines on surcharges. We have outlined on this page the average costs for business and credit card surcharges for Australian airlines on this page.

      I hope this has helped.

      Cheers,
      Liezl

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