Virgin Australia have announced the credit card surcharges that will apply to bookings from September 1. These new credit card surcharges will also apply to the component of Velocity redemptions paid for by a card.
These new credit card fees replace the existing “Booking and Service Fee”. The changes to the credit card fees have been made to comply with new regulations coming into effect from 1 September, 2016 (for large businesses). From that date, regulations require surcharges to be based on the cost of accepting the credit card. Under these rules, there are quite strictly defined definitions of which costs can be recovered through the surcharge.
The announcement from Virgin comes almost a month after a similar announcement from Qantas regarding its own surcharges. As we will seem the new surcharge announced by Virgin matches exactly the change made by Qantas.
New Card Surcharge
As of September 1, credit card surcharges that will apply to bookings are as follows:
| Payments made in AUD on and after 1 September 2016 | Debit card | Credit card | Fee Cap (per passenger) |
|---|---|---|---|
| Domestic | 0.6% of total payment amount | 1.3% of total payment amount | AUD11 |
| International | 0.6% of total payment amount | 1.3% of total payment amount | AUD70 |
In the case of Velocity, the surcharges will apply only to the part of the booking paid by card. The component of the redemption that is in points will not be hit with the surcharge.
At present, Virgin Australia currently levies a fixed $7.70 credit card fee, $10 for trans-Tasman services and $30 for its international flights. These fees are charged ‘per person, per booking’. Being a flat rate, thay tend to over recover on cheaper fares, and under recover on more expenisve fares.
One bone of contention when making a Velocity redemption has been the way it kicks in if the component paid by card exceeds $50. For example, a redemption ticket, such as to the US, includes a taxes component of around $100 – this has then been hit with a booking fee of $30, which did sting a bit.
Examples
In the announcement of the new fee, Velocity provided the following examples:
| Route (one way) | Airline | Class | Points | Taxes & fees* | Plus Card Payment Fee (based on taxes & fees being paid by card) | Total amount charged to card |
|---|---|---|---|---|---|---|
| Sydney – Melbourne | Virgin Australia | Economy | 7,800 | $21.11 | $0.27 for credit card payment
$0.13 for debit card payment |
$21.38 for credit card payment
$21.24 for debit card payment |
| Melbourne – Nadi, Fiji | Virgin Australia | Economy | 22,300 | $78.06 | $1.01 for credit card payment
$0.47 for debit card payment |
$79.07 for credit card payment
$78.53 for debit card payment |
| Brisbane – Los Angeles | Virgin Australia | Economy | 44,800 | $104.15 | $1.35 for credit card payment
$0.62 for debit card payment |
$105.50 for credit card payment
$104.77 for debit card payment |