Following enforcement action against airlines including Easyjet, Ryanair and Alitalia and fines totalling 100,000 Euros, the websites of all airlines operating in Italy must soon quote up-front prices that include the cost of paying by credit or debit card. Omar Bucchioni reports.
Topic: Prices
Who: Italian Competition Authority, Alitalia – Compagnia Aerea Italiana S.p.A., Ryanair Ltd, Blue Panorama Airlines S.p.A., Easyjet Airline Company Ltd and Wizz Air Hungary Airlines Ltd.
When: June 2012
Where: Italy
Law stated as at: 28 June 2012
What happened:
The Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato – AGCM) has recently adjudicated on five cases involving some of the major airline companies operating in Italy: Alitalia, Blue Panorama, Easyjet, Ryanair and Wizz Air.
The breach
Recent investigations showed that the airline companies in question had substantially ignored the previous adjudications made by the same Italian Authority between April and June 2011 by continuing with unfair trade practices (misleading price information) in relation to online ticketing i.e. the fee charged for payment made by debit/credit card was not included in the first indication of the airline ticket price.
The AGCM decisions state that all the companies under investigation were found in breach of relevant regulations in relation to the correct indication of the ticket price on their website (as shown at the beginning of the online reservation process).
In addition, Ryanair was also found in breach of regulations for showing a specific credit card as “free from commissions” when in fact it was not possible to use it for purchases. In addition, Ryanair was found in breach for charging excessive administrative fees to customers requesting a refund of an airline ticket, and for making it difficult to locate the necessary information as to how to make such a request on its website.
The sanction
In terms of fines, the Authority could not be said to have taken a tough line– all the amounts stated below are not typos:
- Alitalia, which committed to provide a ticket price inclusive of any payment charge on their website by 30 November 2012, was fined €20,000.
- Blue Panorama Airlines, which committed to provide a ticket price inclusive of any payment charge on their website by 1 November 2012, was fined €12,500.
- Easy Jet, which the Authority acknowledges has already made “some improvements on its Italian website and on its online booking system” and has to provide a ticket price inclusive of any payment charge on their website by 1 December 2012, was fined €20,000.
- Ryanair, which the Authority acknowledges has already made “some improvements on its Italian website and on its online booking system by including, since the beginning of the booking process, online web check in fee and any additional items inevitable and predictable ” and has to provide a ticket price inclusive of any payment charge as well as the VAT applied to optional services on Italian domestic flights on their website by 1 December 2012, was fined €37,500.
In addition, the Authority fined Ryanair €15,000 for ignoring the previous adjudication concerning the cost Ryanair requested from consumers for getting a refund which was only recently slightly reduced from €20 to €16 on 1 June this year.
Wizz Air, which the Authority acknowledges has already made “some improvements on its Italian website and on its online booking system” and has to provide a ticket price inclusive of any payment charge on their website by 1 December 2012, was fined €10,000.
In terms of deadline for compliance, the Authority has leniently allowed airline carriers to change their practice by no later than 1 December 2012 when all airlines will be required to display ticket prices inclusive of any credit/debit card payment related costs in all advertising communications and on their online reservation pages at the very first moment a ticket price is displayed.
In so doing, the price will be brought to the consumers’ attention immediately and in turn assist them with making an informed decision as to whether to proceed with a booking without having to go through several website pages before knowing the actual cost of a ticket, as it is the case now.
What the EU does
As things stand at the moment, only national enforcement authorities are in a position to formally investigate infringements and impose “meaningful” sanctions.
Back in 2009, the EU Commission published the result of a health check (fact-finding study) looking at more than 400 sites of airline companies. Its findings have given rise to a political initiative of the Commission in order to improve compliance with the items on the checklist although they did not constitute allegations of actual infringement.
The EU airline ticket investigation focused on three key practices with a clear indication of what may well constitute best practice guidance:
- Clear Pricing: the price first advertised on a website should be a final price
- Availability: Any conditions to the offer, particularly limitations on the availability of an offer, should be clearly indicated. Practices used to lure consumers in with attractive offers with no or very limited availability are illegal.
- Fair Contract Terms: General Contract Terms must be clearly indicated, easily accessible and fair. Unfair practices include mandatory insurance attached to an offer. Some countries prohibit situations where consumers have to explicitly opt-out of an insurance clause, rather than opt-in. Contract terms and conditions must be available in the language of the consumer.
The then vice President Antonio Tajani, in charge of Transport said, “Applying full price transparency is an obligation under the air services regulation. It is a duty for airlines to impose high standards across the industry; it is our responsibility to ensure that all players respect the same rules. This is of first and foremost importance for the consumer who wants to compare prices across airlines and make a real choice.“
Examples of good and bad practice
The EU Commission has published a bad example:
http://ec.europa.eu/consumers/enforcement/sweep/bad_site2008_en.htm
And a good example:
http://ec.europa.eu/consumers/enforcement/sweep/good_site2008_en.htm
What airlines should watch out for
The EU Commission published some problem type examples:
1. Unclear information on price – where extra non-optional charges are added throughout the booking process, sometimes at the end, resulting in a different end price, e.g. taxes, booking fee, credit card fee, handling fees, fuel charge, phone charge, invoice fee;
2. Problem with availability of the offer – No real availability of offers announced with eye-catching marketing and/or no information on booking and travel period for special offers or the number available;
3. Problems with the conditions or contract terms – Conditions and/or in a language different to that of the site or illegible due to use of characters of another language and/or prices in a currency other than the target country;
4. Information problem – No indication of contact details for the site.
Why this matters:
Although a clear deadline has now been set for compliance and there is clarity as to what has to be done, the modest fines and long lead time allowed for compliance might be said to represent a positive result for the airlines concerned.
However, this is not only an Italian matter. Airline operators throughout the EU should keep an eye on this type of investigation because competition and advertising authorities in other EU countries are always watching their local websites.
Indeed, in the UK, the OFT announced on 5 July 2012 that 12 airlines had agreed to follow the same approach within a similar timeframe.
Some useful links:
In Italian language:
http://www.agcm.it/bollettino-settimanale/6078-bollettino-222012.html
In English language:
http://ec.europa.eu/consumers/enforcement/sweep/index_en.htm
