Has the clamp down on credit card fees changed airline pricing?

This article is closed to new comments. Feel free to ask your question in the HfP forums.

• Sir Stamford says:

  20 May20 May 09:00

  What I am surprised by is your comment “Most will now refuse to hand over the majority of the funds for a transaction until after the flight has taken place”.

  Cash is of the essence for most, if not all, businesses especially those in sectors with high debt levels and fixed operating costs.

  My experience with businesses within the leisure industry (primarily visitor attractions) is that credit card companies will credit your bank account a few days after the purchase has taken place. It is not relevant whether the consumer has purchased a ticket for a future dated entry date; you get your money now. I can not immediately see why airline transportation companies are treated differently regardless of a small minority of them have previously gone bust.

  Sir Stamford

  • Rob says:

    20 May20 May 09:38

    I have a link to a company that sells hospitality packages for major sporting events, and the credit card companies will release almost nothing (80 per cent) until after the event has taken place. The company requires crazy amounts of working capital.

    • Sir Stamford says:

      20 May20 May 12:57

      Having looked, albeit very quickly, at the latest Annual Report and Accounts for British Airways plc (year ended 31 December 2012), I can not immediately see any mention of this change in cash flow cycle given that it has major business implications and I could not see any large increase in trade receivables either (as the amount should be owed by the credit card to the company). Therefore, I am not sure if they have been impacted by this.

      Sir Stamford

      • Rob says:

        20 May20 May 14:04

        I agree, BA is stable enough to be able to negotiate a better deal I’m sure. I doubt someone like Jet2 or Wizz-Air gets the same deal, though.

        • Andrew says:

          20 May20 May 15:46

          Interesting point – a quick look at Dart Group (who own Jet2)’s accounts shows in 2012 over 20% of their total assets (by value) were trade receivables. In contrast, this is <5% for BA.

        • Sir Stamford says:

          20 May20 May 18:36

          In the Business and Financial review section of Dart plc’s annual report to 31 March 2012 (page 7 of the annual report), the following was mentioned.

          “The business continues to be funded in part by customer payments received in advance of travel from our leisure customers.”

          My take on this is that credit card companies have not withheld payments until the flight dates.

          It is true that they have a higher level of trade receivables in comparison to BA but you need to consider that Dart plc is a more diverse transportation group which has a substantial package holiday and distribution and logistics business. These revenue streams which would generate a sizeable trade receivables.

          As a matter of comparison, in BA, the airline business makes up 96% of the total revenue in 2012. In Dart plc, the airline business is only 68% of total revenue in 2012.

          Sir Stamford

• Will says:

  20 May20 May 09:12

  I’d argue that the important change has occurred in so far as Ryanair and Easyjet’s headline fees are directly comparable across the industry.

  To be frank the scope of covering things like “website charges” is rediculous – if tesco started putting a £7 credit card surcharge online it would be cannon fodder for the evening news. Plus since when has any company itemised it’s final price to that extent – for the consumer the price is simply the price, it’s largely non relevant what the constituent parts of the price are when comparing like for like.

  I think the OFT did well here.

• Tim says:

  20 May20 May 09:40

  You mention Ryanairs’s flat £7 per booking fee. Easyjet also have a flat fee, of £10 per booking. It is not itemised but the cost of flights varies by the number of seats being purchased simultaneously.

  • Rob says:

    20 May20 May 09:46

    Thanks Tim, I missed that because, as you say, it is included in the headline figure and tricky to see.

    • sandgrounder says:

      20 May20 May 09:54

      I think Ryanair charge 2% for a credit card rather than an extra pound. Interesting fact on CC companies holding back funds. This explains a lot, not least the fact that my full journey is shown on my credit card statement, which previously was a bit puzzling.

• Phillip says:

  20 May20 May 10:35

  “BA charges a flat £4.50 per passenger (although American Express cardholders who live in Ukraine are exempt ….).”

  There are also no CC fees at all on ANY CC used for certain other European countries! Not sure what the decider is!

  • Rob says:

    20 May20 May 10:40

    Ukraine is easy to explain away as the slip of a mouse ….

    Also worth noting that some credit cards do a check against the country you put on the form and the address on your card file. Selecting Germany and using a Visa may therefore get rejected. Amex does not do country checks. (It also doesn’t do name checks – you can use an Amex belonging to anyone who shares your address, even if your name is pre-filled and not deletable in the name box on the payment form.)

    • vindaloo says:

      20 May20 May 16:57

      I’m a Uruguay man myself, but to be honest the “slip of the mouse” argument doesn’t wash too well given that it pre-populates the field with United Kingdom. I think we rely more on the fact that it just works and nobody seems inclined to do anything to fix it!

This article is closed to new comments. Feel free to ask your question in the HfP forums.