The Velocity frequent flyer fee change that isn’t actually changing
Virgin Australia's "new" approach still means you'll end up paying for reward bookings.
Yesterday, Virgin Australia sent an email with the subject "Changes to card payment fees" to all its Velocity Frequent Flyer members, explaining how it was altering the fees associated with booking a reward flight. Actually, though, it seems not that much is changing.
Currently, Velocity charges what it calls a "booking and service fee" anytime you book a reward flight using points. This is $7.70 for domestic flights, $10 for short-haul international and $30 for long-haul international. That will stop on 1 September 2016, but that doesn't mean the fee is being dropped. Instead, it is being replaced with a new "card payment fee", the details of which Virgin Australia has not yet disclosed.
All of this is only happening because Virgin Australia has no choice. The Reserve Bank of Australia is cracking down on "excessive" card payment fees, and from 1 September all airlines will have to charge fees which actually reflect the cost of using the cards, typically as a percentage rather than a fixed fee.
Until this email came, I'd forgotten that Virgin charges customers a booking fee for reward flights. I do most of my flying with Qantas, which doesn't charge any booking fee for Classic Flight Reward bookings. You have to pay applicable airport taxes, but not for the use of a credit card to do that if it's a reward flight.
Qantas has already announced the new fees it will charge for regular bookings made with credit cards, which will actually be lower for most customers on domestic flights than the current per-booking charges. That's good news, as is the fact that fees don't apply to reward bookings. It would be nice if Virgin chose to emulate that approach, but I'm not holding my breath.
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.