If you transact online—be it to book tickets or to pay bills—chances are that you have paid an extra amount as convenience fee. This charge is levied by the channel that allows you to pay for a product or service using its platform or payment mode.
WHEN DOES IT APPLY?
Usually, the convenience fee is applicable on small-ticket purchases and services. For instance, if you book a movie ticket, flight ticket, pay an electricity bill or school fee online, a convenience fee will be levied on the transaction. Convenience fee can also be referred to as Internet handling fee. Sometimes, online portals club convenience fee and service tax together without giving the breakup For most websites, the convenience fee is one of the revenue models.
The idea behind convenience fee is to charge for the ‘privilege’ you get of using alternative payment options. It is also to cover the payment processing charges and what payment gateways have to pay banks for online transactions. The fee is usually non-refundable if you cancel the product, say, tickets or clothes you bought.
Understand the premise
If you are like me and have been shopping your tickets online for a while, you have been paying the fees whether you like it or not. The way airlines are charging the fees is fixed cost per person per sector/ticket.
Because Jet Airways doesn’t fly all the routes directly, it redirects you from one of the metro hubs and then drops you to your destination. For example, if you want to fly from Mumbai to Bagdogra and there is no direct flight, you will have to fly to New Delhi and then get an onward connection to Bagdogra. It is not your fault that there is no direct flight between two places. They would use a complex algorithm and charge you for the two flights and added insult would be an additional convenience fee.
Rise in the fees post GST
Earlier Jet Airways and Indigo used to charge their passenger Rs 150-Rs 300 per sector. Secretly without telling anyone or letting anyone know, they have increased the amount to Rs 250- Rs 500 per sector. That is staggering 66.67% more revenue being collected without any government regulation or any other factor. The airline doesn’t have to declare convenience money under GST either as it is being calculated separately.
Why not just add that amount as the part of the fare?
Well, that would make it tax included and ofcourse those numbers when you comparing your ticket prices across multiple airlines won’t look that good like they do right now.