Qantas, Virgin & Cabcharge told to stop ripping off customers

Many readers will be familiar with the joy of finding a cheap flight with either Qantas Airways (ASX: QAN) or Virgin Australia  (ASX: VAH), followed by the annoyance when you reach the final stage of paying and see the fees and charges which have been loaded on at the end.

Consumer outcry has spurred the Assistant Treasurer, the Hon David Bradbury MP into action, announcing that the Commonwealth Consumer Affairs Advisory Council (CCAAC) has launched a survey to investigate the experiences of consumers when encountering credit card surcharges and transaction fees.

A crackdown on these practices couldn’t come soon enough for consumers, who have been getting ripped off for years now. Cabcharge (ASX: CAB) is another company that has been in the firing line over its 10% credit card surcharge. The company has had a tough week with its share price falling 20% in the wake of the Victorian government announcing that it would adopt most of the recommendation from a review into the Victorian taxi industry. The recommendations include a maximum surcharge on credit cards of 5%, which is 5% below what Cabcharge currently charges. While this will make a dent in the company’s Victorian-based revenue, the bigger concern for shareholders is if this move goes national.

It’s not just limited to listed players either. As the CCAAC survey will show, other businesses appear to be abusing the surcharge too, such as Apollo Motorhome Holidays, which is charging a 4.5% surcharge on American Express cards.

Foolish takeaway

Investors need to always be looking for insights into companies and their management. The complaint by customers of excessive fees and charges is not new. Why the airlines haven’t altered their pricing — for example, raising airfares and removing the other fees and charges — says something about management’s attitude to customers. Likewise Cabcharge’s claim that the expense of providing a mobile transaction device in cabs justifies the 10% surcharge is laughable and once again provides investors with an insight into management’s attitude.

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Motley Fool contributor Tim McArthur owns a share in Cabcharge.

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