More airlines to introduce card charges
Swiss Airlines and Lufthansa have announced they will introduce more card charges from November.
The statement comes just weeks after the Office of Fair Trading (OFT) slammed these kinds of charges as unfair and misleading.
The two airlines will impose a £4.50 card charge on customers booking flights through a travel agent from this autumn. Both airlines already charge £4 fee for booking online.
The new charge applies to all card bookings, with no differentiation between paying by credit or debit card.
This comes in spite of recent campaigning against card surcharges in the travel sector.
Consumer body Which? launched a super complaint against the travel sector's use of card fees. On the back of this, the OFT has vowed to crack down on these practices and there is pressure on the government to impose an outright ban on excessive card surcharges.
"It's unbelievable that two airlines have introduced these card fees just weeks after the OFT agreed with us that they are unfair and misleading," says Richard Lloyd, executive director of Which?.
When challenged by Moneywise on the introduction of these new fees, the press office for both airlines – that work in partnership with each other – says Lufthansa and Swiss Airlines are only "following other airlines that have introduced these payment charges before".
It points out that the new charges is only applicable to economy tickets with no extra charges on premium travel.
"With rising costs by credit card companies we had to take this route," a spokesperson adds.
Booking online with either airline costs £4 by credit or debit card, although passengers won't have to pay a charge if they use PayPal.
"Just one simple change to the Payment Services Directive would put an end to debit card surcharges for good," says Lloyd.
He adds: "The Treasury must act quickly to do this before other airlines and businesses jump on the bandwagon and start charging these excessive fees."
A complaint made in the UK by a government-approved watchdog or consumer organisation on behalf of consumers which is then fast-tracked by the Office of Fair Trading (OFT). For a super complaint to be valid, it has to be about a “market feature, or combination of features, such as the structure of a market or the conduct of those operating within it, that is or appears to be significantly harming the interests of consumers”. In March 2011, the OFT received a super complaint from consumer watchdog Which? asking the regulator to investigate excessive surcharges imposed by issuers of credit and debit cards.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.