Flying QF on AA FF number - getting an upgrade process?

[Anna]

Ahh, but from my long past UN days, I note that for a contract of sale the information on the AA web site is not the offer. It is generic information advertising the product. The offer comes about when the purchaser "offers" to purchase the product by offering payment for it. The contact is formed when the vendor accepts the offer of payment. So in your description, the "offer" is made by the purchaser sitting on their computer in Australia (or anywhere else in the world, it does not matter), and the offer is "accepted" by AA who are in the USA. So by your definition, the contract of sale has been formed in the USA at the point when AA accepts your offer of payment for the product or service they have advertised.

Are you saying there is information on the AA website that specifies when acceptance takes place?

 

[Yada Yada]

Anna - thanks for your input. It certainly is an interesting situation.

Dave Noble provided a tip on using the website (e.g. changing selected fare type) and by doing this I was able to get a fare quote from AA.com.

SYD-PER and return in business class (QF575 on 27/09 & QF566 on 29/09) was quoted at USD $2,073.20, which equates to AUD $2,692.47 using an ex.rate of 0.77. The QF website is quoting AUD $2999.44 for the same flights, so a saving of AUD $306.97.

I noticed a link about taxes during the process so clicked on it. For the countries that are listed as being OK to purchase via the website, it listed their local taxes, e.g. sales tax, VAT, etc.

There was also a fare rules link. It displayed the following:

THE PROVISIONS BELOW APPLY ONLY AS FOLLOWS -
- TICKETS MAY NOT BE SOLD IN AUSTRALIA.
- FARES MAY ONLY BE SOLD BY QF OR QF.
- TICKETS MUST BE ISSUED ON EITHER THE PLATE OR STOCK OF QF OR QF AND MAY ONLY BE SOLD IN AUSTRALIA.
- SALE IS RESTRICTED TO SPECIFIC AGENTS.

I also phoned AA in the USA and asked one of their website specialists why Australians weren't permitted to purchase QF tickets via AA. She said that it was because they did not have the credit card processing infrastructure in place for Australian credit cards. I asked what would happen if I tried, and she said it would detect I was using an Australian credit and not permit the booking.

Now just where would the ticket be deemed to be issued if AA relocated their computer system to India or outsourced it to a company hosting the processing in Mexico? Hmm, that could be interesting.

Interesting indeed! If this process is all above board as Dave Noble suggests, then what is stopping wholesale avoidance of GST via this means? :shock:

BTW, AA's Sydney number now routes to a call centre in Dehli, so it may well be the case that their booking system is housed somewhere other than the USA. :!:

 

[NM]

Are you saying there is information on the AA website that specifies when acceptance takes place?

I suggest that is when they confirm they have accepted your offer to pay for the advertised product or service by providing the transaction confirmation details. Having never purchased a ticket from AA.com, I don't know the actual form such transaction confirmation takes, but expect you get some sort of page presented to you that can be printed for your records.

Another confirmation will be the CC transaction record on your CC statement. In my experience with Amex and Visa transactions, the country where the transaction is processed appears on the statement. Transactions in the USA generally also include the US state.

 

[Anna]

I suggest that is when they confirm they have accepted your offer to pay for the advertised product or service by providing the transaction confirmation details.

I don't agree with that interpretation because legally speaking, the formation of a contract can be a different issue from payment. You can have a contract before you have had payment.

Further, if you are correct, then doesn't it follow that all AA's website sales take place in the USA? So why does AA specify that the tickets cannot be sold in Australia/NZ? On your interpretation, it would not be possible for sales to be taking place in Australia/NZ so AA does not need any such wording.

None of the above detracts from my enormous gratitude to you, NM, for your all of the great tips and assistance you have given me and others on this website.

 

[NM]

There was also a fare rules link. It displayed the following:

THE PROVISIONS BELOW APPLY ONLY AS FOLLOWS -
- TICKETS MAY NOT BE SOLD IN AUSTRALIA.
- FARES MAY ONLY BE SOLD BY QF OR QF.
- TICKETS MUST BE ISSUED ON EITHER THE PLATE OR STOCK OF QF OR QF AND MAY ONLY BE SOLD IN AUSTRALIA.
- SALE IS RESTRICTED TO SPECIFIC AGENTS.

Interesting conflict in those rules. First line says the ticket may not be sold in Australia. Then the 3rd line says it may only be sold in Australia. Given that AA are advertising this fare for sale, and apparently willing to accept an offer to purchase it, it would appear that they believe the fare may be sold outside Australia.

BTW, AA's Sydney number now routes to a call centre in Dehli, so it may well be the case that their booking system is housed somewhere other than the USA. :!:

Not yet. The system may be supported and administered from India or some other foreign outpost, but the metal is firmly ensconced in Fort Worth, Texas, and is unlikely to ever move outside the USA unless someone can overcome the laws of physics as they relate to latency of data communications being somewhat proportional to distance.

 

[Altair]

Well simple me thought it is in the final steps of booking and reserving a ticket.
Also the eticket receipt that is sent or paper ticket would indicate acceptance of the offer by AA.
Regarding the location of the computer....I think it is going down the wrong track. Rather would it not be where the IATA has registered the issuing ticket office to be eg. AA Dallas, Texas, United States. QF Sydney, New South Wales, Australia.
For the local taxes that are listed on aa.com, you will need to see those countries tax code to see if they do not have the exemption that Australia has in ANTS.
Personally, I do not equate the purchase of tickets to purchasing a book on Amazon. A ticket is for a service that will be performed in Australia but a book is for a good bought overseas....then again I did not get a high distinction in taxation law due to a calculation error in selling off a partially developed property. But who wants to be an account when you can work in finance?

 

[NM]

I don't agree with that interpretation because legally speaking, the formation of a contract can be a different issue from payment. You can have a contract before you have had payment.

Only if you have an agreement to make payment and an agreement to accept that form of payment. And I suggest that happens at the same point as you hit the final "yes I want to buy this fare" button and AA verifies your credit card details are acceptable. Before that point, you are not committed to the purchase and hence no contract in place yet.

Note from the aa.com web site when viewing their advertised products that meet your search criteria, it states

Fares are not guaranteed until tickets are purchased

So that tells me that they consider the contract point to when you have purchased the ticket, and that does not happen until they accept your offer of payment (in both value and method).

Further, if you are correct, then doesn't it follow that all AA's website sales take place in the USA? So why does AA specify that the tickets cannot be sold in Australia/NZ? On your interpretation, it would not be possible for sales to be taking place in Australia/NZ so AA does not need any such wording.

Yes, aa.com web site sales take place in the USA. It would seem that they have copied and pasted that part of the fare rules directly from the rules that QF imposes on the sale of that fare basis. In this case QF has defined the valid points of sale which is a common practise in the airline industry. Basically QF is defining to AA where AA is permitted to sell the fare. So you could not use aa.com to "hold" the booking and then walk into AA's office in Sydney to complete the transaction (assuming they still have an office in Sydney), because then the sale would be deemed to take place in Australia - even if the ticket was still issued somewhere else since the point of sale and the place of ticket issue need not be the same.

None of the above detracts from my enormous gratitude to you, NM, for your all of the great tips and assistance you have given me and others on this website.

I too find this a fascinating topic to discuss. And of course you are free to hold a view different to mine. I think its great that we can debate our interpretations and understanding of the process. And the more layers we peel off this onion, the more interesting it gets .

 

[Anna]

Also the eticket receipt that is sent or paper ticket would indicate acceptance of the offer by AA.

Personally, I do not equate the purchase of tickets to purchasing a book on Amazon. A ticket is for a service that will be performed in Australia but a book is for a good bought overseas....

The e-ticket receipt is not acceptance in my view, it is merely confirmation of the contract.

Good point re the difference between buying a book and buying a service. How does that impact on the GST question?

 

[Dave Noble]

Well simple me thought it is in the final steps of booking and reserving a ticket.
Also the eticket receipt that is sent or paper ticket would indicate acceptance of the offer by AA.
Regarding the location of the computer....I think it is going down the wrong track. Rather would it not be where the IATA has registered the issuing ticket office to be eg. AA Dallas, Texas, United States. QF Sydney, New South Wales, Australia.

No. AA does issue in other locations. (If it is still open) you can walk into the AA office in N Sydney and get a ticket issued there; if it is for domestic travel, then there will be GST applied to the sale if sold at that office

If the location issuing the ticket, whether it be paper or electronic is sat in Fort Worth, then the ticket was issued in Fort Worth. if the ticket is issued outside of Australia, it specifically states in the tax applicability that for tickets issued outside of Australia ( and NM has neatly described how the ticket is issued outside of Australia ) that there is no UO tax to be charged

If you get QF in London to issue a ticket for travel in Australia, then again there will be no GST applied

Dave

 

[Yada Yada]

No. AA does issue in other locations. (If it is still open) you can walk into the AA office in N Sydney and get a ticket issued there; if it is for domestic travel, then there will be GST applied to the sale if sold at that office

Just an aside... I tried to phone AA in North Sydney today. All of their advertised phone numbers (the Sydney 02 number and the free-call 1300 numbers) are answered with a recorded message advising that the number has changed. The new number given (a 1800) number is answered by a call centre in India.

 

[NM]

Regarding the location of the computer....I think it is going down the wrong track. Rather would it not be where the IATA has registered the issuing ticket office to be eg. AA Dallas, Texas, United States. QF Sydney, New South Wales, Australia.

Yes, I suspect you are correct, it will be wherever IATA deems the issuing agent to be located. But do note that AA can issue tickets outside the USA. All tickets will be marked (either on the paper ticket or in the e-ticket record whether or not it is shown on the e-ticket receipt) with the issuing location.

Looking at a paper ticket I have here, it includes a box that is titled "Date and Place of Issue" and in the box it has "02391104 06JUN5 QANTAS AIRWAYS INTL SALES DESK BRISBANE AU". So that ticket was clearly issued by Qantas at Brisbane Airport.

Similarly on an e-ticket receipt issued on 081 Qantas ticket number, see field that include "Issuing Agent", "IATA Number" and "Issuing Location". In this example the location shows as "SYDNEY AU".

I also have an AA award e-ticket receipt for an e-ticket issued by AA in Sydney that shows the Issuing Location as "SYDNEY AU". So AA can in fact issue tickets at any of their registered ticketing offices, just the same as QF can issue tickets in the USA at any of their ticket offices in the USA.

 

[JohnK]

Interesting indeed! If this process is all above board as Dave Noble suggests, then what is stopping wholesale avoidance of GST via this means? :shock:

Well let's see. Would jail be a sufficient deterrent?

Set up an offshore bank account and create a website that is based in the USA only accepting Australian credit cards with an Australian address. Purchase products, wholesale, from overseas on a daily basis but ensuring that value is <$1000 therefore avoiding paying duty and GST. Store products in a warehouse in Sydney. Wait for producs to be sold, at a significant mark-up and without charging GST, from US website to Australian residents and deliver product to Australian address.

This is fantastic! Anyone interested in investing please PM me?

 

[Dave Noble]

Well let's see. Would jail be a sufficient deterrent?

Set up an offshore bank account and create a website that is based in the USA only accepting Australian credit cards with an Australian address. Purchase products, wholesale, from overseas on a daily basis but ensuring that value is <$1000 therefore avoiding paying duty and GST. Store products in a warehouse in Sydney. Wait for producs to be sold, at a significant mark-up and without charging GST, from US website to Australian residents and deliver product to Australian address.

This is fantastic! Anyone interested in investing please PM me?

There is no similarity between the ticket purchase and this stupid idea.

There is no offence committed purchasing goods from the USA and having them delivered to Australia, which has no similarity to this idea.

Dave

 

[Yada Yada]

There is no similarity between the ticket purchase and this stupid idea.

There is no offence committed purchasing goods from the USA and having them delivered to Australia, which has no similarity to this idea.

Gee, it sounds remarkably similar to me. Even if we accept that the flight is ticketed in the USA, the product itself is produced, supplied and consumed within Australia. In both JohnK's idea and the AA website loophole, the transaction could be deemed to be off-shore but everything else occurs locally.

This AA website loophole truly is an anomaly.

 

[NM]

... Store products in a warehouse in Sydney. Wait for producs to be sold, at a significant mark-up and without charging GST, from US website to Australian residents and deliver product to Australian address.

The problem is how to get the good into the Sydney warehouse without you having to pay the GST in the first place!

now, if you used Hong Kong as the location for the CC payment processing, or even establish an Australian bank account for your customers to direct deposit the payment or use a service like PayPal, and have the good stored in a warehouse in Hong Kong and delivered to your Australian customer via the postal system, then you would have a model that is being used very effectively by hundreds of EBay sellers who do not seem to be spending any time in prison.

 

[Yada Yada]

The problem is how to get the good into the Sydney warehouse without you having to pay the GST in the first place!

Not too difficult if you are a business. Simply register for GST, elect to do monthly BAS returns, and tell ACS you elect to delay payment of duty (if any) and tax. ACS will then not ask for GST up front and allow delivery of the goods to you, and the in/out GST entries simply flush through your next BAS so no cash changes hands.

 

[NM]

Not too difficult if you are a business. Simply register for GST, elect to do monthly BAS returns, and tell ACS you elect to delay payment of duty (if any) and tax. ACS will then not ask for GST up front and allow delivery of the goods to you, and the in/out GST entries simply flush through your next BAS so no cash changes hands.

But that is assuming you then have collected GST from your customers to "flush" the system. All you are doing is "delaying" payment of GST until you sell the stock. You do have to pay it eventually.

 

[Yada Yada]

But that is assuming you then have collected GST from your customers to "flush" the system. All you are doing is "delaying" payment of GST until you sell the stock. You do have to pay it eventually.

No... the way it works is that ACS charges importers GST upon arrival of goods into the country. Importers registered for GST simply claim this back, so no tax is paid. And the ACS deferral system enables importers to defer paying the GST until the BAS is returned, thereby avoiding even being out of pocket for a month.

If an importer then operates in the manner suggested by JohnK, no more GST transactions take place. :shock:

 

[simongr]

Just back on track a little. If my upgrade gets approved I will be able to tell on line (or via an email) about 5 hours before the flight - which means I can change my luggage selection accordingly - as I will get a higher allowance. I assume even though I am not flying on my QF SG card I can still take advantage of my extra 10kg

Hmm 40KG for a 2 week business trip to NZ - maybe I could do some people smuggling

 

[Dave Noble]

Just back on track a little. If my upgrade gets approved I will be able to tell on line (or via an email) about 5 hours before the flight - which means I can change my luggage selection accordingly - as I will get a higher allowance. I assume even though I am not flying on my QF SG card I can still take advantage of my extra 10kg

Hmm 40KG for a 2 week business trip to NZ - maybe I could do some people smuggling

Whether you are crediting to QF or not, you are entitled to the benefits associated with the status, so you do get the 10Kg extra

If the upgrade clears, then it will show online that you are in business class and you will be able to plan accordingly

Dave