All
airlines eventually will surcharge for using all payment cards, according to
AirPlus International managing director and chairman Patrick Diemer, but the situation
subsequently will evolve as card companies charge
transaction fees to corporate customers instead of merchant fees to carriers.
Diemer
told BTN that the AirPlus Debit
Account, the world's first debit-based travel agency lodge card, announced in
August and to be launched in November, is the first example of what he labeled a
"new model." AirPlus last week also revealed publicly that it intends
to charge Debit Account customers €3.40 per transaction when airlines agree to
waive their surcharges for accepting payment with the new product. However, AirPlus
has waived the €3.40 for
bookings on Lufthansa Group airlines Lufthansa, Swiss, Austrian Airlines,
British Midland International and Brussels Airlines. On Aug. 3, Lufthansa Group announced a card surcharge of varying amounts in several European countries. AirPlus,
which is a subsidiary of Lufthansa Group, announced its Debit Account on the
same date, and Lufthansa Group simultaneously said it would waive its surcharge
for payments through the Debit Account.
Diemer
said AirPlus did not initially mention the €3.40 transaction fee because "as an
exception from the rule, we started by waiving the €3.40 for Lufthansa Group airlines." He
added that AirPlus has been making the proposed fee clear in its presentations
to clients.
Diemer
rejected the suggestion that the strategy of waiving the transaction fee for airlines
owned by its parent group was designed to push more business to them from other
carriers. "The difference is too small," he said. "Customers won't
switch airlines because the card cost is a couple of euros cheaper."
AirPlus
charges a much lower merchant fee to airlines for its Debit Account than for
its traditional, credit-based Company Account lodge product. So far, no other
airline has agreed to waive its surcharge for the Debit Account. Diemer confirmed
to BTN that AirPlus is "having
initial conversations with other airlines," but added that "we are
not yet at a stage to sign a contract for a waiver." AirPlus neither will charge
a Debit Account transaction fee for bookings on airlines that have not imposed
a surcharge, nor will it charge the fee to airlines that have imposed a
surcharge but not waived it for Debit Account customers.
Diemer
predicted that other card issuers would launch similar products. "Our
competitors will carefully watch what is happening," he said. "If
there is a take-up of the Debit Account, they will have to react, and there
will be more corporate debit cards.
"Our
idea is that this is the start of a new business model," he continued. "It
is our assumption that other airlines will join the club of those imposing a
surcharge. We don't like it, but we cannot close our eyes to it. We are
offering the market a model stripped of all credit card-based features: no late
payment, no rebate, but no surcharge either, and we are asking a fee for it.
Because both airlines and customers benefit from card payments, both should
pay. It's more like 50/50."
Diemer
also told BTN that he believes the
entire corporate market eventually will be affected. "I foresee a
situation where all cards are surcharged by all airlines," he said. "We
are at the beginning of a process similar to the move to zero commission for
travel agents, where card companies will invoice their customers, not airlines.
Customers understand that indirectly they are all already paying a price, but
at the moment they don't know what that price is." Diemer said customers
would benefit from the transparency of direct billing for card usage and from
having the option to include such additional services as insurance.
In
a position paper issued last week, AirPlus stated that a large airline can earn
more than €100 million
annually from credit card surcharges. Since this may equate to the carrier's
total profit, there is little prospect of giving up this lucrative new source
of income while carriers continue to pay merchant fees.