Qantas and Virgin under fire for credit card surcharge rip-offs

Information verified correct on October 1st, 2016
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Qantas and Virgin will have to explain their hefty credit card surcharges in front of the Senate credit card inquiry next week.

The last few months has seen the government putting the pressure on credit card providers to explain and improve exorbitant credit card fees. Following the Senate inquiry on credit card surcharges and the Turnbull government’s vow to crackdown on excessive surcharges, Qantas and Virgin are due to discuss their own surcharges in front of the Senate inquiry in Canberra on Monday 9 November.

At the time of writing, Qantas customers are charged $7 per passenger for Australian and Trans-Tasman flights and $30 for international trips. Virgin’s fees currently sit at $7.70 per person for domestic flights and $30 for long-haul international trips. In a submission to the Senate inquiry, Qantas said the surcharges were necessary to cover costs, and noted there are other payment options available (such as BPAY or a Qantas gift card) so cardholders can avoid the fee.

Gold Coast businessman Klaus Bartosch, who led a public campaign against Jetstar’s apparent surcharge “gouging”, will also appear as a witness for the public hearing of the Senate Economics References Committee. During his campaign, Bartosch argued that credit card surcharges were a “uniquely Australian phenomenon” and that excessive fees should be abolished.


What are the airlines charging and how does this compare to the market?

Consumer advocate Klaus Bartosch highlighted to the Senate committee that Jetstar imposed surcharges of up to 34 times the average fee, while Qantas charged triple the average.

Bartosch, who is fighting for a national ban on surcharges, told the inquiry the average merchant fee for MasterCard and Visa was 0.81%. Qantas’ markup on a $197 air ticket was 339% above the average, while Virgin Australia’s was 412% above the average for a ticket valued at $185.

“It undermines consumer confidence, will undermine consumer spending and ultimately business will lose,” Bartosch said.

How did the airlines fight back?

As expected, the airlines defended the surcharges saying the fees do not cover the service costs. Andrew Parker, Qantas group executive for government affairs, told the hearing that the airline had only recovered 81% of the reasonable cost of card acceptance over 2014 and 2015.

Virgin Australia’s Adam Thatcher also told the inquiry that his airline also suffered a significant loss, but refused to provide an exact figure.

The verdict

Labor senator Sam Dastyari said the evidence from both airline was hard to believe.

“This is a rort being perpetrated on Australian taxpayers and consumers. They can fly you half way round this giant continent for $70 but it costs them $8 just to process a fee online?” he said.

Dastyari argued that transactions should cost a couple of cents and laws should be altered so the fees accurately reflect service costs.

Last month, the Turnbull government proposed a cap on surcharges for the new financial year, though details are yet to be released.

The committee report, including the findings and proposed actions, is due for release on November 24 2015.


Looking for tips on how to reduce fees when booking flights? We’ve got you covered.

How can I avoid credit card surcharges?

While the Turnbull government has pledged to put to a stop to surcharges that surpass the “reasonable costs faced by merchants in accepting cards” in the new financial year, there are some ways you can sidestep surcharges right now.

Alternative payment methods

When booking flights, consider the following payment alternatives to avoid credit card surcharges:

  • Qantas. If you use a Qantas gift voucher of BPAY to transfer funds from your account to pay for flights, you’ll escape the standard surcharges. Keep in mind that these options can only be used for bookings made seven days prior to departure.
  • Virgin. Virgin on the other hand allow cardholders to wriggle out of booking and service fees when using POLi Direct Payment options or a gift voucher.
  • Jetstar. Pay with a Jetstar MasterCard or Jetstar Platinum MasterCard to steer clear of booking and service fees with Jetstar.
  • Tiger Airways. If you pay using an Australian issued MasterCard debit card, you won’t be charged the standard booking and service fee of $8.50.

Dual-card account

Some merchants only charge surcharges on certain card types, so a dual-card will give you wider acceptability and reduce your chances of incurring extra fees. For example, if you have a credit card that is a dual American Express and MasterCard, but the merchant charges on American Express cards, the MasterCard in your card will let you dodge the surcharge.

Dual credit cards comparison

Rates last updated October 1st, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
ANZ Frequent Flyer
Receive 25,000 bonus Qantas Points after your first eligible purchase is made within 3 months of card approval, enjoy easy payments using Apple Pay and earn 1 Qantas Point per dollar spent.
19.99% p.a. $95 p.a. Go to site More info
ANZ Frequent Flyer Black
Earn up to 75,000 bonus Qantas Points after you make your first eligible purchase within 3 months of card approval plus earn 1.5 points per $1 spent. Easier payments with Apple Pay.
19.99% p.a. $425 p.a. Go to site More info
ANZ Rewards Platinum
Enjoy accelerated points earning and great Platinum features with ANZ Rewards Platinum. Also offering 50,000 Reward Points after your first eligible purchase is made within 3 months of card approval.
18.79% p.a. $95 p.a. Go to site More info
ANZ Frequent Flyer Platinum
Get 50,000 bonus Qantas Points after first eligible purchase is made within three months. Earn up to 1.5 Qantas Points per $1 spent on purchases.
19.99% p.a. $295 p.a. Go to site More info
ANZ Rewards Credit Card
Get 25,000 bonus Reward Points after your first eligible purchase is made within 3 months of card approval and earn 1.5 points per dollar spent.
18.79% p.a. $80 p.a. Go to site More info
ANZ Rewards Black Credit Card
Earn 75,000 Reward Points after your first eligible purchase within the first three months. Up to 3 reward points per dollar spent and unlimited access to airport lounges with complimentary travel insurance.
18.79% p.a. $375 p.a. Go to site More info
ANZ Rewards Travel Adventures card
Pay no overseas transaction fee on purchases and receive complimentary domestic return flight and lounge passes each year you hold the card when you spend $500 on eligible purchases within the first three months.
20.24% p.a. $225 p.a. Go to site More info
Commonwealth Bank Business Platinum Awards credit card
Earn up to 3 Awards points per dollar spent, enjoy complimentary insurances and $0 annual fee for the first year.
20.74% p.a. $0 p.a. annual fee for the first year ($300 p.a. thereafter) Go to site More info

The Turnbull government is optimistic that it can stamp out excessive credit card surcharges in the new financial year. However, before July 2016 rolls in, there are a few simple steps you can take to avoid sneaky surcharges.

Follow our coverage of the Senate inquiry for Qantas and Virgin’s verdict and to discover how this could impact you.

How to avoid credit card surcharges

Sally McMullen

Sally McMullen is a journalist at finder.com.au who is a credit cards and travel money expert by day and music maven by night.

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Credit Cards Comparison

Rates last updated October 1st, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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