Saturday, July 7, 2012
End to Ryanair debit card tricks as budget airlines forced to include payment fee in ticket price
Aer Lingus, BMI Baby, Eastern Airways, easyJet, Flybe, German Wings, Jet2, Lufthansa, Ryanair, Thomas Cook, Thomson (TUI) and Wizz Air have been forced to undertake the changes after an Office of Fair Trading consumer law investigation.
By December this year, the airlines will have to include the price of paying by debit card in the headline price of air tickets. They will also have to explain any additional fee for paying by credit card up front so that charges are not sprung on passengers at the end of a lengthy booking process.
The OFT estimated that debit and credit card surcharging in the airline sector has been costing consumers £300million a year.
Airline regulations means that ticket prices have to include all unavoidable charges. But in some cases, airlines were making passengers take out obscure payment cards if they wanted to get the advertised rate without an additional charge.
Main offender was Ryanair, which insisted passenger pay via the little-used Vise Electron card, and later by its own branded pre-payment card, if they wanted to avoid a £6-per-person charge.
Consumer group Which? made a 'super-complaint' over the use of these tactics in February 2011 and the OFT began investigation later in the year. The OFT today confirmed that debit cards were the online equivalent of cash, and should therefore be able to be used without a charge.
The results and enforcement action today are particularly embarrassing for Ryanair.
At the time of the Which? complaint, the Irish budget flier launched a public attack on Which?. It called the consumer group 'Which, Who or What magazine', and described it as a 'useless and irrelevant "consumer magazine"' that was bought by 'less than one man and his dog’.
In a bizarre press release, Ryanair spokesman Stephen McNamara said at the time: 'Before making "Super Duper Complaints" the clueless clowns at ‘Which, Who or What’ magazine, should conduct some basic research. Ryanair does not levy any credit or debit card payment "surcharges". Even our administration fee is avoidable by passengers who use our recommended MasterCard Prepaid.'
He concluded: 'If it wasn’t for dentist waiting rooms or doctors’ surgeries it is doubtful whether anyone even reads the useless and frequently inaccurate "Which, Who or What’ magazine”.'
But officials agreed with Which? and decided that Ryanair and the others did have a case to answer.
In its case notes published today, the OFT said the airlines were 'engaging in prohibited unfair commercial practices', as well as committing 'breaches of professional diligence' and breaking airline regulations that require flight prices to be presented inclusive of all unavoidable charges.
Clive Maxwell, the OFT's chief executive, said: 'This is a great outcome for the millions of people who buy flights online. It is important that the cost presented when they search for a flight is realistic and that they are not surprised by extra charges. Otherwise it is harder for them to shop around for the best deal.'
Which? chief executive Peter Vicary-Smith said: 'Over 50,000 people supported our campaign to end rip off surcharges so it's good news that debit card surcharges will be displayed in the headline price of flights - as long as the airlines don't use this as an excuse to push up their prices.
'It's also important that credit card charges are clearly displayed throughout the booking process and the OFT should make sure that all companies are taking these steps, not just airlines.'
The OFT came to agreement with the airlines after making it clear failure to comply could trigger court action. Each of the airlines will enact the changes according to a timeline agreed with the OFT, with all changes completed by 1 December.
Following recommendations from the OFT last year, the Government has also announced plans to bring forward legislation to ban excessive debit and credit card surcharges across the economy.
Posted by Thibaut Labarre at 10:18 PM