The convenience fee charged on online air tickets may soon be a thing of the past. The Centre has written to domestic airlines proposing withdrawal of the fee charged for online transactions.
Most domestic airlines charge a non-refundable convenience fee of Rs.150, on an average, for online booking of a one-way ticket. Jet Airways and GoAir charge a Rs.150 fee per route for every passenger. IndiGo takes Rs.75 from a passenger on all net banking transactions and Rs.150 for all credit or debit card purchases. SpiceJet and AirAsia India also have different slab rates for internet banking and card transactions. Vistara charges Rs.200 as ticketing fee per passenger that is non-refundable.
“The government wants to promote electronic payment and the Finance Ministry has been taking up the issue of reducing online transaction costs with various government departments,” said a senior civil aviation ministry official, on conditions of anonymity.
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“We have been asked not to pass on the cost of convenience fee to the consumers,” said another civil aviation ministry official.
Domestic airlines have, however, opposed the move asking the government to bring down the Merchant Discount Rate (MDR) they end up paying to the banks on such card transactions.
“(We)…would like to express our concerns, on the proposal of withdrawal of convenience fee on card transactions, if considered, without any change of rates in MDR levied by the banks on card transactions, will add a huge burden on the airlines’ card cost and will significantly escalate with the increase in volume,” the Federation of Indian Airlines (FIA), which represents leading airlines such as IndiGo, Jet Airways, SpiceJet and GoAir, said in its submission to the ministry.
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Referring to a June 2 letter from the Ministry inviting comments on the proposal, FIA Associate Director Ujjwal Dey said in the letter that airlines are “already burdened with a high cost environment” and have “no choice but to levy a convenience fee that offsets the MDR and other card processing costs.”
“Preventing airlines from charging a convenience fee will result in increase in fares, as airlines will be forced to cover this loss,” the airlines said, adding that they have to pay MDR on all taxes collected for air transportation which varies from 10-50 per cent of the ticket value.
A Passenger body, however, appreciated the proposal saying airlines shouldn’t charge extra fee for buying tickets directly from them. “If someone goes to an airline’s website, she is paying the airline right away so there is no reason why a convenience fee should be charged by airlines for buying a ticket directly from them,” said D. Sudhakara Reddy, National President of Air Passengers Association of India.
“It will not be a fair proposal to make airlines not charge a fee against this service extended to the passengers even as banks and credit card companies continue to earn by way of providing credit card services,” the airlines said.