AirAsia's convenience fee for value-added services

05 November 2009

We refer to the letter AirAsia's 'convenience fee' a rip-off.

AirAsia very recently imposed a convenience fee for online credit card payments. This fee is meant to recover costs in implementing, upgrading and maintaining our online payment systems. It subsidises but does not cover the full costs of the related systems.

It is also to enhance security features for credit card payments to give guests a comfortable and safe booking environment. The convenience fee is neither a surcharge for use of credit cards nor an administration fee.

In the past, we absorbed these costs. However, now that AirAsia is experiencing a rapidly growing number of online transactions, these costs have significantly increased.

This convenience fee is charged on a per way per guest basis because the costs of these systems are driven by the value of the transaction rather than by the number of transactions. As costs vary per country, the convenience fee also varies.

Contrary to the writer's spurious allegation, the convenience fee is not only legal but an accepted industry-wide practice. Several other airlines, both legacy carriers and low-fare carriers, have imposed such fees, which the writer could have confirmed with a little bit of research. In fact, our fees are the lowest in comparison with those airlines.

AirAsia has other payment channels that do not impose the convenience fee. The fee is not imposed on transactions using direct debit, E-Gift Voucher and credit shell. Neither is it imposed on transactions made through the call center, at airport sales counters and at sales offices where the normal service fee applies.

The writer's allegation that AirAsia 'decided to sneakily slip' the convenience fee into our charges is unfounded. Our online booking system clearly shows that we impose a convenience fee.

His accusation that AirAsia guests get to know about the convenience fee only after they enter their credit card details is false. Information about the convenience fee is reflected on our
website, right above and before the portion asking guests for payment details.

As for the contention that the convenience fee is being imposed because of AirAsia's financial situation, we believe that this is an unfounded allegation. AirAsia has been consistently profitable in its operations since the new management took over in 200 1.

The only year in which the airline suffered losses was in 2008, due to the volatility in fuel prices and our decision to unwind our fuel hedges and buy fuel on the spot market. This courageous move by the management has since proven to be the correct one given that other airlines are still sitting on huge losses because of their hedged positions on fuel.

AirAsia has been praised by analysts and experts for its transparency on this issue. AirAsia, though effective business planning and implementation, has contributed positively to the growth of Malaysia and the Asean region.

We have developed tourism and helped mitigate the impact of the economic crunch on the local economies. We have served countless communities with our low fares. By winning accolades in the aviation and tourism sectors, we have done Malaysia proud.

It is unfortunate that the writer appears to have overlooked the positive impact of AirAsia and instead chosen to launch a scurrilous attack on our company for reasons best known to himself.

The writer is regional head, Communications AirAsia.