Airline declines credit card, then hires collection agency to extract $510 “cancellation” fee

Kalevi Ruuska contacted me with an urgent problem recently. One of his friends was being asked to pay an odd cancellation fee by Air Berlin, and would not take “no” for an answer. The airline had hired a collection agency to pursue its claim.

His story underscores a fact few of us here in the United States seem to understand: No matter how bad airline fees are here, they’re worse in Europe.

It also suggests that when it comes to surcharges and ancillary fees, there’s a lot of room for growth. I almost hesitate to write about this case, because it might give some of the more fee-happy airlines here in the States ideas for making more money.

Here’s Ruuska’s problem:

Stuttgart-JFK flights were booked for four people. The purchase goes through using a US credit card (MasterCard), but a few weeks later Air Berlin sends a note that the card was declined, and that they have cancelled the reservation.

But there was nothing wrong with the card, but rather Air Berlin IT system has a problem with American credit cards. The family was already in Europe, and didn’t see the the note.

Then Air Berlin requests the client to pay a cancellation fee — of the cancellation they did themselves!

I know that their contract terms have a reference to the client being responsible for credit card companies’ non-payment to them. But my logic just doesn’t accept that if you get an OK, when booking the flight, it can still be cancelled weeks later!

Is any reservation at Air Berlin safe? They might cancel any time if their logic is followed.

That’s not the worst of it, though.

Air Berlin has hired a collection agency to collect a $510 cancellation fee. They threaten to sue my friend in court, unless the amount is paid within 30 days. Do we need to pay this, and fight afterwards, or should we just go to the court, or is there something else we can do?

I asked to see the correspondence between Air Berlin and his friend. But the collection notice had spooked him enough that he paid the fee before I could contact the airline on his friend’s behalf.

That’s very disappointing.

I’ve written about Air Berlin’s dubious cancellation policy before. In that case, the airline apologized for the inconvenience, but insisted it was correct.

Indeed, the charges are disclosed in Air Berlin’s terms.

Under section 2.4,

If a credit card company or bank refuses to settle the claim arising from the contract for reasons that are the customer’s responsibility, the customer shall be required to pay a flat rate of 10 EUR as compensation for the bank’s return debit note. The customer is free, under German law, to prove that the airline did not suffer any loss or that the loss incurred was significantly less.

Otherwise the Airline shall also be entitled in this case to terminate the contract after unsuccessful payment request, subject to a deadline in accordance with sections 5.1.1–5.2 and levy the corresponding charges stipulated therein. Sections 5.3 and 5.1.4 shall apply accordingly.

Section 5.1 states,

5.1.3. If a long-haul flight (the great circle distance between departure point and destination being at least 3,000 miles) booked as a saver fare is not taken or is cancelled, the Airline is entitled to charge the following amounts, unless the circumstances resulting in the flight not being taken or being cancelled are the Airline’s responsibility or due to force majeure:

up to 21 days before departure: 20 % of the fare
up to 14 days before departure: 30 % of the fare
up to 7 days before departure: 40 % of the fare
up to 1 day before departure: 50 % of the fare
on day of departure: 100 % of the fare (net).

As outrageous as this might seem, I’m afraid this might be the future of fees. And in a sense, this is the perfect fee.

Can Ruuska prove the card was declined because of Air Berlin’s IT problem? No. Can he show that the fee his friend was forced to pay was illegal? Probably not. Can he, or his friend, say “no” when a collection agency comes calling? Apparently not.

But it doesn’t take an airline analyst to see how wrong this cancellation fee and its enforcement is. It is outrageous, and it’s probably illegal, and it’s definitely unethical.

I’m not entirely sure what to tell the next passengers who get smacked by Air Berlin’s fees. Should they pay the cancellation fees, ignore them, or fight them?

(Photo: Vito/Flickr Creative Commons)

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