Credit card fees make Ryanair up to 1900% profit
27.07.08
Ryanair's attempt to justify its €5 fee per flight for credit card bookings has been dismissed by the banking industry, the Times reports. The airline claimed last week that it is charged a handling fee by banks for every passenger included in a single credit card transaction. However, several banking sources have told the newspaper that this is not correct.
A caller to The Last Word on Today FM last week queried why a person booking 10 passengers on a return flight and paying in a single credit card transaction would be charged a card handling fee of €100. Stephen McNamara, Ryanair’s spokesman, said: ‘All of those processes go to Visa 10 separate times, so we have to make sure that we cover the costs.’
However, The Sunday Times reports that airlines are charged a set percentage of the total payment irrespective of how many passengers or tickets are booked. Banking sources told the newspaper that, due to the bargaining power of the aviation giant, it is likely to be paying less than 2% per transaction, 'a fraction of the charge that is actually levied.'
The Times gives an example of a return flight from Dublin to Manchester, departing August 26 and returning August 30 that costs €19.98 including taxes, but incurs a card handling fee of €10. This is equivalent to 50% of the transaction total, yet Ryanair is only charged, at most, 50c by its merchant bank to accept the payment. The newspaper points out that this represents a 1900% profit for the airline on the handling charge.
Ryanair says customers can avoid the charges by using the Visa Electron card, which incurs no handling fee. But, Visa told the Times that only a pre-paid card similar to store gift cards is available in Ireland.
Add to: del.icio.us | Digg it | Newsvine | NowPublic | Reddit
To book stansted airport hotel or stansted airport car parking at the lowest price, click on these links to two great stansted airport car parking and stansted airport hotel price comparison pages.
