The long running saga of British Airways and the fees charged to it by credit card companies took another turn last week.
BA has instituted a policy of charging discounted fares that are billed via a credit card, with BA as the merchant will be subject to a surcharge by the airline.
The exact terms of the new surcharge are as follows:
Introduction of Payment fee
From 01 March 2011, British Airways is introducing a payment fee structure in the UK for BA tickets, purchased with credit card or charge card through a travel agent. This will offer customers in the UK a consistent policy when purchasing tickets.
As part of this change, a £4.50 payment fee will be charged for non-premium British Airways tickets purchased. This charge is currently in place for tickets purchased on ba.com, so this will bring the payment fee charges into line across both booking formats.
The payment fee is applicable to any ticket issued on a BA 125 ticket validation where the form of payment is a credit or charge card and where the fare for the segment is an economy cabin fare; Debit Cards issued by Mastercard or Visa badged as “Visa Debit”, including Electron, or “Mastercard Debit” will be free of charge. The payment fee only applies to transactions made using British Airways’ card acceptance agreements (Merchant Agreements). The payment fee is applied by fare code.
Notes on application
The payment fee applies to transactions made using British Airways’ card acceptance agreements (Merchant Agreements).The payment fee does not apply to sectors with a premium fare designation. This means that travel wholly in premium cabins is exempt (First, Club World, Club Europe and World Traveller Plus).Flights which combine premium designated fares and economy designated fares on the same ticket will incur the charge.Certain domestic services on British Airways are sold using fare codes which start with J and C and where these codes are used the payment fee will not apply.Flights which involve travel on an interline or codeshare journey with an eligible economy designated fare will incur the payment fee.The charge applies to prime ticket issue only and not to any subsequent reissue or revalidation.The payment fee is non-refundable.
Payment Fee rates GB £4.50 per ticket
British Airways will file the Payment Fee with ATPCo. The GDS will pick up the filed feed and will show this optional charge in the GDS’ merchandising functionality. When an eligible itinerary with a chargeable card is ticketed, the GDS will automatically apply the Payment Fee to the transaction. For further details of your specific GDS functionality please contact your GDS Helpdesk.
Now, interestingly, as with other airlines BA has long charged a fee for credit card transactions on its websites.
In the case of BA it charges a credit card surcharge for all classes on BA.com, but for travel agencies it is being lenient and only charging it on the back of the bus – the World Traveller and World Traveller Plus cabins.
BA has complained long and hard about the charges levied by credit card companies.
Indeed, over ten years ago it went so far as to stop accepting American Express cards for a while. That situation was eventually smoothed over and Amex and BA are now back to being best friends.
As the airlines continue their relentless push to take customer initiated charges and push them to the customer directly, we will see more airlines likely to engage in this behavior.
Of course, this is not going without protest. The Institute of Travel & Meetings sharply criticized British Airways following news that the airline will introduce the credit card charge on all non-premium cabin bookings through UK-based travel agents.
While the practice is common for European low cost carriers to charge a premium for credit cards, the traditional airlines have been slow to adopt the practice across the board.
However it is now common practice, with several airlines including BA and Aer Lingus collecting fees.
KLM tried to impose this charge in its home market in 2009, but quietly withdrew the charge in 2010.
With new credit card protection legislation in place and the fall0out of new charges stemming from the financial crisis of 2008-2010, we can expect to see credit card companies raising rates and being more restrictive about credit terms.
As noted in a post on the UK market, the credit card merchant rules are being tightened.
Airlines are bound to pass on these charges or force the intermediary to become the merchant of record instead.