Who charges least convenience fee for flight ticket booking?

Convenience fee has become a necessary evil. The amount you see in first screen while checking airfare is never the amount you pay. The final amount charged will always be a few hundred rupees to few thousand rupees more.
Why is convenience fee charged extra?
Airlines work on wafer thin margins. Every cost component is broken down and separated. A fancy restaurant probably has a profit margin of 20-40% or even more on the amount you pay, so they can afford to pay 2-3% to banks as transaction fee when you swipe the credit card. But airlines prefer to skip including the transaction charge upfront as it serves two purposes- one they can keep the initial amount low and appear cheap and second, since transaction charges could be different for different modes of payment, including it upfront may not be right.

But what should be the right convenience fee? 
This is always debatable. To my understanding, banks charge a % of transaction amount- which is usually very small, around 1 to 2%. If a flight ticket costs Rs 2500, convenience fee shouldn't cross Rs 50 (2%) I can probably pardon another % more. Further, airlines are high volume customers booking tickets worth crores every month- they don't necessarily have to pay what a small shopkeeper pays. Airlines can negotiate transaction fees with banks and should be able to pass the benefit to customers. But most airlines and OTAs often markup this expense and charge a fixed fee per person per flight. Sometimes the convenience fee comes to one fourth of the ticket price-like during the current Spice Jet Monsoon sale- you can get a Chennai-Hyd ticket for Rs 2500 but need to pay Rs 500 as convenience fee, which is 20% of ticket cost. I fail to understand how exactly Spice Jet is incurring a payment/bank settlement related expense worth Rs 500 on a Rs 2500 transaction. I think for many airlines and ticket selling websites convenience fee is a mean to earn extra revenue through a pure psychological game. Consider this:
1. Most customers do not even notice that an extra Rs 400-500 has been added to Amount Payable. Easy money to the airlines
2. Few customers will notice, but since they've already spent lots of time n effort in selecting the date, entering passenger details etc, they might think it is OK and continue paying the convenience fee
3. Few customers will notice it but they have to travel anyway, so will be forced to pay the convenience fee as there's no other option or almost all airlines charge similar amount.
4. Only very few like opportunistic travelers like me try to assess the trip is still worth even after the huge convenience fee and decide not to proceed with ticket booking as 20% convenience fee on Rs 4500 ticket is not making economical sense and I have no compulsion to travel to specific destination.

I think banks only care about total amount transacted- they don't care if it is one way ticket or return or if there're 2 passengers or 4. Airlines have made it convenient for themselves by charging convenience fee per flight per user, instead of keeping it as a % of total amount payable.

Another possible thought: Airlines are probably considering worst case scenario- like max fare on any domestic ticket is around 20000, so 2% of 20000 is 400, so airlines charge this flat amount even when amount payable is much lesser- penalizing cheaper ticket buyers.

I can understand online payment incurs a transaction cost- but why for airline counter or sale counter? If I am booking say 4 return tickets on SpiceJet, the convenience fee adds up to Rs 2000. It is cheaper for me to take a taxi, go to their sales office in Chennai or airport counter in Chennai and pay in cash. But they charge convenience fee for cash payment also, which defeats the whole purpose because despite undertaking inconvenience of having to physically reach the counter, I am forced to cough up extra. If they've decided to charge a fixed fee irrespective of mode of transfer, they should ideally factor it in base fare and avoid this last screen shocker.

Convenience fee by mode of payments:
Credit cards are the most expensive form of payments for merchants, because banks and payment gateway charge a commission on transaction plus there is a long credit period (like 45-60 days) before the amount is actually realized. Net banking on the other hand should be low risk and quicker, so some vendors charge less for net banking transaction.

I made some checks to identify how much different airlines/travel portals charge per return ticket (domestic only). Below is what I found. All amounts in INR
Payment Mode/ Airline
Credit Card
Debit Card
Net Banking
UPI/ BHIM
Rupay/ PayTM
Airport Counter/sales office/cash
Others
SpiceJet
500
500
500
250
500
500

Indigo
400
400
400400400
400

Jet Airways*
600-3000
600-3000
600-3000
600-3000
600-3000
Free as per website

Air India
25
25
25




Air Asia
340
340
99
NA
99

316 (cash)
Vistara
150
150





Makemytrip
500
500
500




Cleartrip
400
400
400
-NA-
-NA-
NA

Yatra
400
400
400
400
400
NA

Disclaimer: All amount as spotted during my check. Fees and charges may vary from airline to airline over time depending on multiple factors. Use your discretion.

Jet Airways
Jet Airways convenience fee is a function of ticket fare. Up to 20000 INR it is Rs 300 per ticket, for tickets priced 1 lakh and above it is Rs 1500. So expect a minimum Rs 600 extra cash outgo on whatever fares they advertise. They seem to be the most expensive of all airlines in terms of convenience fee.

Air Asia
You can check Air Asia's convenience fee here, they don't charge it as a % of fare but a fixed fee for sector and depending on payment type. Paying by net banking is a bit cheaper at Rs 99 whereas credit card payment costs Rs 340 more, still cheaper than most rivals. International flights have a different rate card!

SpiceJet: 
Rs 250 per flight,per person, adding to minimum Rs 500 per return trip per person, irrespective of mode of payment (only UPI is cheaper). Earlier they used to charge Rs 100 per person, per flight-now increased to Rs 250 during sale, Rs 225 otherwise. For a low cost ticket (like Rs 1000 one way) convenience fee of Rs 250 is like 25% extra- very inconvenient indeed.

Spicejet customer care used to provide a phone banking option through which there was no convenience fee. Not sure if it is still possible- reaching the customer care is often tough.

Indigo:
Indigo convenience fee is marginally cheaper than rival Spicejet, at Rs 400 per return trip per person

AirIndia:
A pdf document on Air India website claims a convenience fee of Rs 25 per person per ticket will be charged- this is cheapest of the lot and most reasonable. But I tried checking on the site- selected a destination, put some name and went till payment page- couldn't see the amount going up. May be they will include it only while processing payment?

Update: A reader has commented that he/she was able to book an Air India ticket without paying any convenience fee...

Vistara
Vistara charges Rs 150 per return ticket for credit card payment. Fair amount I can say.

Conclusion
So far Air India and Air Asia has the best model for convenience fee. Air Asia are truly the masters of low cost aviation. Other airlines can learn a thing or two from Air India and Air Asia. Jet airways, Make My Trip and Spicejet are most expensive when it comes to convenience fee.

There was a news that convenience fee will be abolished- unfortunately nothing like that has happened.

Next time you book your ticket, pay close attention to the convenience fee. Don't let the initial amount fool you. The total amount you pay is what matters. Did you have any specific experience w.rt convenience fee?

6 comments:

  1. The convenience charge has always been a hidden charge which we get to know after we decide to book and the discounts offered in the beginning becomes meaningless as we end up paying more becoz of convenience charges.

    ReplyDelete
    Replies
    1. Yes.. 20% is too much. IRCRC has best model for transaction costs.

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  2. Nice comprehensive analysis.

    My experience - The amount that you have mentioned under travel sites like Makemytrip (Rs. 500 for using credit card) - I don't remember paying it for the recent flight booking I had done (couple of months back). Not sure if there are some conditions under which it is waived off

    ReplyDelete
    Replies
    1. Good for you- please check again- must be some one time offer or something. Are you sure you were not charged? (it may not reflect on the ticket, need to check amount charged to the card

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  3. I recently booked a Air India flight without convenience fee. Paid through credit card.

    ReplyDelete
    Replies
    1. Thanks for sharing this info... Updating the post

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