Airlines Are Taking Advantage of There Customers
The internet has changed our lives a lot.
The way we purchase things like flights is much easier online.
You no longer have to pick up the phone to call someone.
Now you can just jump online, see the flights and punch in your credit card details.
Extremely simple, you would have to agree.
But there is a downside to this.
Airlines have now started charging merchant fees directly to their passengers.
What is a merchant fee you ask? When making purchases with a credit card a small portion is taken away in merchant fees.
This is a fee that bank/credit card companies have laid upon businesses for accepting payments via a credit card.
This fee is there to help the banks/credit card companies make a profit.
Back in 2002, the Australian government allowed businesses to start charging this fee directly to their customers.
For example, there is a service station near my house where when you pay for your fuel they say if you want to pay by credit card there will be a 1.
5% surcharge on your fuel.
Instead of the service station taking the loss, you will take the loss.
This adds to your overall cost.
If you purchased $40 worth of fuel from this service station with your credit card you would be charged an additional 0.
60 cents.
Most businesses don't charge this 1.
5% of the total bill, as this is exactly what they get charged.
However most businesses don't pass on this fee to their customers.
The business pays it.
One of Australia's airlines have taken this to a new level.
They have started charging a flat credit card fee of $7.
70.
This fee is per customer and per flight (e.
g.
you pay it twice on a return flight).
What makes this fee ludicrous is that it is regardless of what you spend! Find a cheap $60 flight and you still get charged $7.
70.
Let's give a real life example.
Jumping onto there website.
I want to book a real life one way flight from Adelaide to Melbourne on the 14th of June.
Looking at all the flights, there is one flight that leaves at 6:05 am.
This flight costs $95.
Now if we paid this cost with our credit card, they would be hit with a merchant fee of 1.
5% of the total.
So they would have to pay $1.
42 to their bank/credit card company.
However, they are charging me $7.
70.
As you can imagine they would pocket the remaining $6.
28.
Plus this fee is for each passenger.
If you were booking this trip for a family of four you would be charged $30.
80!!! All the while for them they are only paying between $2.
85 and $5.
70.
That's a tidy profit.
However this fee seems to be capped at $7.
70.
For example, on the same day if I purchased a ticket on flight going to Melbourne in their business class section, this would cost me $12.
20.
Normally if a retailer were going to pass on this 1.
5% merchant fee to their customers we would be forced to pay $18.
30.
But they only charge $7.
70.
So what they seem to be doing is subsidising their higher spend customers, with higher charges from lower spend customers.
How can this be legal? Imagine if the same was done with tax.
A government said we are going to charge a flat dollar amount on income tax.
For example $100 a week tax.
This would help the rich and hurt the poor.
As if you are earning $500 a week before tax, 20% of your money would be gone.
However if you were earning $1200 a week before tax only 8.
33% would be gone.
They has made the decision to charge smaller more inexpensive flights a higher total percentage of the cost while bigger more expensive flights get their credit card charges subsidised.
MADNESS! While we believe these fees are an outrage.
There is a simple answer.
Get rid of your credit cards.
Cut them up.
Cancel them.
Send them on a rocket to the moon.
How you get them out of your life does not matter.
But not using them is the main thing.
Even if the airlines charged only the 1.
5% (a correct fair amount) they get charged for using a credit card this would still be adding more to your bill.
Avoid this charge by not using any credit cards.
The way we purchase things like flights is much easier online.
You no longer have to pick up the phone to call someone.
Now you can just jump online, see the flights and punch in your credit card details.
Extremely simple, you would have to agree.
But there is a downside to this.
Airlines have now started charging merchant fees directly to their passengers.
What is a merchant fee you ask? When making purchases with a credit card a small portion is taken away in merchant fees.
This is a fee that bank/credit card companies have laid upon businesses for accepting payments via a credit card.
This fee is there to help the banks/credit card companies make a profit.
Back in 2002, the Australian government allowed businesses to start charging this fee directly to their customers.
For example, there is a service station near my house where when you pay for your fuel they say if you want to pay by credit card there will be a 1.
5% surcharge on your fuel.
Instead of the service station taking the loss, you will take the loss.
This adds to your overall cost.
If you purchased $40 worth of fuel from this service station with your credit card you would be charged an additional 0.
60 cents.
Most businesses don't charge this 1.
5% of the total bill, as this is exactly what they get charged.
However most businesses don't pass on this fee to their customers.
The business pays it.
One of Australia's airlines have taken this to a new level.
They have started charging a flat credit card fee of $7.
70.
This fee is per customer and per flight (e.
g.
you pay it twice on a return flight).
What makes this fee ludicrous is that it is regardless of what you spend! Find a cheap $60 flight and you still get charged $7.
70.
Let's give a real life example.
Jumping onto there website.
I want to book a real life one way flight from Adelaide to Melbourne on the 14th of June.
Looking at all the flights, there is one flight that leaves at 6:05 am.
This flight costs $95.
Now if we paid this cost with our credit card, they would be hit with a merchant fee of 1.
5% of the total.
So they would have to pay $1.
42 to their bank/credit card company.
However, they are charging me $7.
70.
As you can imagine they would pocket the remaining $6.
28.
Plus this fee is for each passenger.
If you were booking this trip for a family of four you would be charged $30.
80!!! All the while for them they are only paying between $2.
85 and $5.
70.
That's a tidy profit.
However this fee seems to be capped at $7.
70.
For example, on the same day if I purchased a ticket on flight going to Melbourne in their business class section, this would cost me $12.
20.
Normally if a retailer were going to pass on this 1.
5% merchant fee to their customers we would be forced to pay $18.
30.
But they only charge $7.
70.
So what they seem to be doing is subsidising their higher spend customers, with higher charges from lower spend customers.
How can this be legal? Imagine if the same was done with tax.
A government said we are going to charge a flat dollar amount on income tax.
For example $100 a week tax.
This would help the rich and hurt the poor.
As if you are earning $500 a week before tax, 20% of your money would be gone.
However if you were earning $1200 a week before tax only 8.
33% would be gone.
They has made the decision to charge smaller more inexpensive flights a higher total percentage of the cost while bigger more expensive flights get their credit card charges subsidised.
MADNESS! While we believe these fees are an outrage.
There is a simple answer.
Get rid of your credit cards.
Cut them up.
Cancel them.
Send them on a rocket to the moon.
How you get them out of your life does not matter.
But not using them is the main thing.
Even if the airlines charged only the 1.
5% (a correct fair amount) they get charged for using a credit card this would still be adding more to your bill.
Avoid this charge by not using any credit cards.
