Aviation Bulletin - June 2011

Which? Super-Complaint Regarding Airline Card Charges And OFT Investigation

In April 2011, the UK Office of Fair Trading wrote to a number of airlines which operate from the United Kingdom further to a "super-complaint" made by Which?, a UK independent consumer organisation, raising two principal concerns:

The imposition of credit and debit card surcharges is not always sufficiently transparent and the revelation of charges late in the purchasing process restricts consumers from effectively and efficiently shopping around and comparing prices; and Where surcharges exceed a "reasonable" estimate of the costs likely to be incurred by the trader in processing the consumers' payments, consumers are likely to be harmed. Which? considers that the above practices are most likely to result in detriment where there is no practicable alternative payment mechanism for consumers. Which? has highlighted these practices as being particularly prevalent in the passenger transport market. Detailed research regarding the internet booking processes and levels of card charges adopted by 10 major European airlines has been undertaken by Which? and presented in the super-complaint. Research is also presented regarding the general practice of adding charges in stages through a booking process, known as "drip pricing" and how this affects consumers' behaviour.

Under Section 11 of the Enterprise Act 2002, the OFT is required to respond within 90 days to a super-complaint made by a designated consumer body such as Which? regarding features of a market in the UK which are or appear to be significantly harming the interests of consumers. The OFT must publish a response within the 90 day period stating how it intends to respond to the complaint and in particular whether it has decided to take any action.

Pursuant to the Enterprise Act 2002, the OFT may also make proposals to the UK Government on any matter relating to its function following which the law may be changed. The OFT may also accept and enforce undertakings from those being investigated.

In order to have a sufficiently clear picture of the markets under scrutiny and to be able to fully respond to the super-complaint, the OFT has submitted detailed requests for information regarding payment surcharges to several airlines.

EU Regulation 1008/2008

The main governing legislation on air fares is EU Regulation 1008/2008 on common rules for the operation of air services in the EU.

Article 23 on information and non-discrimination states as follows:

"1. Air fares and air rates available to the general public shall include the applicable conditions when offered or published in any form, including on the Internet, for air services from an airport located in the territory of a Member State to which the Treaty applies. The final price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as all applicable taxes and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. In addition to the indication of the final price, at least the following shall be specified;

(a) air fare or air rate;

(b) taxes;

(c) airport charges; and

(d) other charges, surcharges or fees, such as those related to security or fuel;

where the items listed under (b), (c) and (d) have been added to the air fare or air rate. Optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the customer shall be on an 'opt-in' basis."

In its Information Note regarding application of Regulation 1008/2008, the Commission gave the following guidance:

"The final price to be paid shall at all times be indicated; this means that the final or "allinclusive" price needs to be indicated whenever there is a price quote, and this in all types of information e.g. advertisements or information given by the travel agent or a website. With regard to the booking process, the final price to be paid should be provided right from the beginning of the...