Qantas and Virgin Australia claim that they undercharge customers

Amid accusations of credit card surcharges, Qantas Airways and Virgin Australia claim that they actually undercharged customers. As growing number of customers complain of being overcharged on flight fares, both airlines claim that they charge less in reality.

"Qantas recovers less than its total cost of card acceptance," said Andrew Parker, group executive government and international affairs, according to the Sydney Morning Herald.

Some of the Qantas executives said they levy booking fees between$7 and$30 and the company were able to recover only about 80 per cent of the full cost per booking. "In 2014-15 Qantas recovered 81 per cent of its reasonable cost of card acceptance,” Parker added.

They added that a large portion of the charge is levied by the bank which the customer uses to book the tickets and also include IT costs, fraud losses and other administration costs.

Virgin Australia has also made remarks of similar lines but hasn’t provided the details of their costs the fees collected. Virgin Australia’s general manager of revenue management, Anthony Stokes, said that they levy booking fees between $7.70 and $30 per person, noting that 85 per cent of it goes to merchant service taxes.

"In the 2015 financial year there was a significant shortfall in the revenue through the fees [charged] compared with the costs incurred," he said.

Virgin general counsel and group executive for corporate risk Adam Thatcher also said that its booking and service fee was not a credit or debit card surcharge but instead covered a broad range of costs.

However, none of the airlines were ready to reveal details about the fees collected or the amount they had to pay for merchant service fees and other costs.

Meanwhile, Queensland businessman Klaus Bartosch, who has been waging a campaign against surcharges, fronted the Senate credit card inquiry before the airlines. He believes that airlines levy excessive charges on fares. However, Parker told the Senate Economics Reference Committee that Qantas recovers much less than its total of card acceptance through card surcharges, reports the Australian Aviation.

While rejecting such claims, Bartosch said that a Visa or MasterCard payment costs airlines about 0.81 per cent per transaction but Jetstar, which is Qantas offshoot, was charging a$17 round trip booking fee on an$87 airfare per person. In the case of Virgin Australia, it was charging a round-trip fee of $15.40 on the fare of $185.90.

He also claimed Jetstar was able to collect up to $200 million a year from surcharges.

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