Qantas could face $270m hit from RBA payment reforms
Australia’s most popular airline could face an earnings hit of nearly 2% as a direct result of the Reserve Bank’s overhaul of the way payment fees and surcharges work.
Australia’s national carrier Qantas is emerging as an unlikely and significant victim of the Reserve Bank of Australia’s (RBA) payment reforms with its iconic frequent flyer program at risk of losing up to $270 million as a result of changes to fees and surcharges.
The RBA confirmed on Tuesday its decision to cap interchange fees charged by banks, slashing funding for loyalty programs like Qantas with Bank of America head of Australia financials research Matt Dunger warning the move would hit the airline’s bottom line.
“A reduction in interchange revenue would constrain banks ability to fund rewards which could impact Qantas’ loyalty growth trajectory or reshape competitive dynamics in the Australian card market,” Dunger wrote in a note to clients earlier this month preempting the decision.
The RBA’s decision to disrupt the $900 million interchange market was the “worst case” scenario for the airline, Dunger wrote, estimating it would put between $144 million and $270 million “at risk” — or up to 9.4% of Qantas loyalty annual revenue .
