Debate erupted during a panel discussion here at an NBTA Europe conference last week when Irma Rinkel, travel manager for Dutch corporation Bluewater Energy Services, along with representatives from AirPlus International and BCD Travel, protested credit card merchant fees levied by KLM Royal Dutch Airlines and others. Such fees increase the cost of many tickets purchased in the Netherlands by between €7.50 (US$9.50) and €10 (US$13.67).
KLM in July 2009 imposed the credit card fees for transactions in global distribution systems. Before that, fees had applied only to transactions through online channels. KLM extended the policy to tickets purchased through GDSs for its lower booking classes once the GDSs developed better technology to customize airline surcharges for credit card merchant fees, said KLM vice president of e-sales Dries Klein.
"We had discussions with KLM--the most important airline for us, as it's the home market--about this during contract negotiations," Rinkel told The Transnational. "They were very clear: KLM does not benefit from credit card payments and there are good alternatives, so KLM will not pay the merchant fee any longer. Most credit card companies and TMCs had the same point of view: The corporate is the one who benefits most from credit card payments (lower transaction fees, management reports) so [the airline] passes it on to the corporate customer."
Klein claimed the impact on the corporate market is limited because the fees apply only to tickets purchased in heavily restricted booking classes, generally not favored by corporate travelers.
BCD Travel vice president of credit card programs Mario Kriebel, disagreed, noting that many corporations seek to contain spend by booking tickets in lower airfare categories.
For Bluewater, Rinkel said 1,000 of its 3,000 tickets purchased year to date had been hit with the KLM fee or similar fees charged by Brussels Airlines and Finnair. She estimated that the total cost of those merchant fees--roughly $10 per ticket--was $3,000.
"Business travel starts to be a labyrinth of fees," Rinkel said, noting unbundled pricing for airlines, hotels and travel management companies. "Who knows what to expect next from full-service carriers? A charge when you use the toilet on board? A charge for check-in at the airport? A vending machine on board so you can get your own coffee? The current situation makes it difficult to manage the total travel costs and the total costs per trip."
Rinkel said she fears other airlines will adopt the credit card surcharges and that KLM will extend its policy to cover all booking classes. "In that case, it will cost us about $30,000 [during the first six months of a year]. I don't know where it will end. It's already pretty accepted."
BCD's Kriebel agreed. "We are not talking about peanuts; other airlines will jump on this," he said. "Educate your finance people. It's just the European airlines that are doing this; the other airlines are watching."
Finnair applies a €7.50 (US$9.50) per ticket charge in the Netherlands, and an official confirmed that the carrier in October is planning a similar surcharge in Finland for credit card transactions via travel agents. In Sweden, Air France and KLM last month rescinded a policy that imposed surcharges on credit card bookings via agencies (excluding corporate net fares). "The Swedish government has issued a law that forbids surcharging credit card payments as of 1 August 2010," according to an Air France spokeswoman. "In order to comply with the law, Air France-KLM has withdrawn its credit card surcharge in Sweden."
In the United States, United Airlines has enacted policies to require some purchasers--including certain smaller travel agencies and those buying consolidator fares--to establish and use their own credit card merchant agreements, thereby moving merchant fees down the line to consumers.
"Ancillary fees or credit card fees are here to stay," said panelist Michiel Verhaagen, executive vice president in Europe for AirPlus. "It's massive what airlines are gathering in revenues from ancillary fees."
The panelists, excluding KLM's Klein, agreed that splitting the credit card cost--instead of shifting it entirely to buyers--would be an agreeable solution.