I’m normally in agreeement with most of what Christopher Elliott writes on his very entertaining travel consumer protection blog, but in this article that I saw via The Seattle Times, has really missed the mark by going after airlines charging credit card service fees. Most consumers seem to think credit cards are free of any cost, but this is only because of the no surcharge rules imposed on merchants by the major card schemes. This is not the first time I’ve mentioned this issue (eg. here and here)

One thing I have to give Christopher Elliott credit for is opening my eyes to the true nature of the “convenience fee” that I’ve written negatively about in the past – I’ll have to change that tune going forwards. Here is what he wrote:

Two discount air carriers, Spirit Airlines and Allegiant Air, now charge fees to customers who pay by credit or debit card. Spirit adds a $4.90 passenger usage fee for bookings not made in person at its airport locations. And Allegiant applies a $14 surcharge to tickets booked through its Web site but waives this “convenience” fee if you buy in person at one of its ticket offices. Both are de-facto credit card fees.

But then he loses me with this paragraph:

If these fees are allowed to take root, they’ll be impossible to exterminate. Something tells me that market forces alone won’t kill them, and neither will the lone protests of a consumer columnist. I suspect only government regulation can prevent these card tricks from continuing.

Rather than blaming the airlines or the card schemes (it is after all big companies negotiating contracts with other big companies) maybe he should really be calling for government regulation to ban the no surcharge rules and allow airlines to openly charge whatever they want in credit card surcharges. Before anyone jumps up and down without fully understanding this issue, promoting competition in payments is a good thing. Rather than me going into full detail here, if you are interested in understanding the topic of credit card surcharges and their impacts (from an economic policy perspective, not an airline ancillary revenue perspective) then you definintely need to read this excellent report from the Reserve Bank of Australia. If airlines in the US have to hide credit card cost recovery under the guise of the convenience fee rather than an openly stated credit card surcharge fee, then don’t blame the airlines.

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