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British Airways moves credit card fees to a flat 1% ….. as Virgin Atlantic scraps them

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According to reports in Business Traveller, British Airways is changing the way it calculates credit card fees on bookings from 14th December.

The current charge is a flat fee of £5 per booking, with no fee on award bookings or when debit cards are used.  This is obviously unattractive on low value bookings, although in those scenarios you would presumably have no liquidity problem if you used a debit card anyway.

British Airways BA A380 flying

The new structure is a flat percentage rate of 1%.  This is obviously attractive for a £39 one-way economy flight to Manchester, but a nightmare for anyone paying for a number of premium tickets.

Whilst the card fee is capped at £20, this is per ticket and not per booking, so a family of four could still be faced with an £80 bill for four Club World tickets.

It is hard to claim that the new structure is ‘unfair’.  I would only point out you are more likely to put an expensive ticket on a credit card and may not have the option of using a debit card if you do not have the money immediately available.

There does not appear to be any discount for British Airways credit card holders.

It is not clear if the fee will continue to be waived for anyone who states that their credit card is registered outside the UK.

Whilst Virgin Atlantic scraps its card fee …..

It is possible that British Airways chose to do this because Virgin Atlantic has always had a similar – higher, actually, at 1.5% – card pricing structure.

However, with great timing, Virgin Atlantic dropped all credit card fees when it relaunched its website last weekend.

Whether this survives now that British Airways is charging up to £20 per ticket remains to be seen.

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Comments (115)

  • Marc Bertrand says:

    Pathetic from BA, but then it’s a race to the bottom of the barrel for Senõr Cruz, et al.

    • Nick says:

      I’ll second that. Cruz is a sinister looking individual – a modern day Blackbeard – pirate of the skies. His strategy appears to be that cutting cost whilst charging extra by way of credit card fees, charging for M&S sandwiches and squeezing more passengers into smaller seats with less legroom will drive shareholder value. That may work in the short term but eventually the customer realises they are being raped and pillaged. Michael O’Leary ran into this trap at Ryanair which became increasingly unpopular compared to rival easyJet – however O’Leary was smart enough to realise he had pushed the cost cutting too far and reversed his policy with the airline starting to offer more to its customers. Cruz is playing with fire at BA as he treats his customers with contempt and risks alienating his premium passengers who over time will switch to other carriers that offer more comfort and better service in premium long haul cabins whilst using low cost carriers who offer no less than BA – but charge less – for domestic and European routes.

      • Richard says:

        Well said! I agree totally and try my best to not fly BA, but sometimes to the USA it’s the only choice. The unfortunate thing is that once one airline dares to bring in a new extra cost or cut in service rule the other tend to follow.

        • Billy Buzzjet says:

          Not long before they ditch the hot towel service in Club. Surely there’s a few quid to be saved in that !?
          Have that suggestion on me Captain Cruz.

  • Genghis says:

    “nightmare for anyone paying for a number of premium tickets”
    I’m sure I’ll still sleep at night. I live in Ukraine.

  • James67 says:

    It is unfair in the sense that the BA statement on tbe issue claims that they are only passing on the fee that they are charged by the card providers which is clearly not the case.

    • Andrew (@andrewseftel) says:

      I believe that the applicable law – Consumer Rights (Payment Surcharges) – can be tested and enforced in court. I suppose a MCOL could make sense for a large booking on a consumer credit card. Perhaps a lawyer can step in and advise!

  • RIccati says:

    Percentage charge is a progressive tax.

    The cost of processing payment is the same whether it is £30 or £3000. I think airlines look at it different ways: “losing £3000” due an ineligible transaction is more noticeable than doing so on £30.

    In effect, if you want to purchase an expensive ticket, the airline charges you for “counterparty risk” that “you” create!

    • Andrew (@andrewseftel) says:

      When the law (Consumer Rights (Payment surcharges)) came in, BIS guidance explicitly rejected counterparty risk as a cost that could be passed on through card acceptance fees. I assume current interpretation is the same.

      • RIccati says:

        Interpretation or not, if you are paying/owe large amount to the company, the counterparty/bad debt risk is created.

  • Ian says:

    With bank interchange rates capped at an all time low, NO company should be able to make a profit from processing a credit card.

    BA would never get away with this in the USA.

    Over here we simply accept it.

    • Lady London says:

      I thought the law is actually, that merchants are not allowed to charge more to use credit cards, than the actual to them of the customer using the credit card instead of cash?

  • Andrew (@andrewseftel) says:

    Perhaps payment processing is the one area of the business that has escaped cost cutting! In fairness perhaps they are taking a lot of payments from commercial plastic, but then seems bizarre that they would cross-subsidise accepting commercial cards from price-insensitive businesses by ‘overcharging’ price-sensitive consumers.

  • Concerto says:

    Yet another reason to completely boycott BA, really.

  • Gavin says:

    At the moment there’s no credit card fee for redemptions, or for seat reservations. Will be interesting to see if that changes.

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