Headline air fares are set to rise after 12 mostly ‘no frills’ airlines - including Ryanair and easyJet - headed off possible court action by scrapping penalty fees for paying by debit card.
Under a peace deal announced by the Office of Fair Trading today, the carriers will incorporate debit card surcharges into advertised prices rather than introducing them at the end of the booking process.
Surcharges for credit cards - which cost more to process - will still be allowed, but the airlines have promised to make those more transparent.
The airlines - Aer Lingus, BMI Baby, Eastern Airways, easyJet, Flybe, German Wings, Jet2, Lufthansa, Ryanair, Thomas Cook, Thomson and Wizz Air - are likely to raise their 'headline' fares to make up the lost revenue.
Most have already changed their pricing, advertising and websites; the others will change advertising this month and complete the changes over coming months.
Welcoming the deal, the Office of Fair Trading said that customers should not have to pay fees for using a debit card which it described as the “online equivalent of cash.”
Clive Maxwell, chief executive, said: “It is important that the cost presented when they search for a flight is realistic and that they are not surprised by extra charges.”
The OFT began investigating the debit card fees last March following a super-complaint from the consumer group Which? and had warned airlines to scrap the fees – or face court action.
Mr Maxwell said: “We made it clear from the start that we would use all of our enforcement powers, including court action if necessary, but are pleased to have reached agreement with the airlines before court proceedings were required.”
The fees are a costly hidden extra: Ryanair currently charges a £6 ‘administration fee’ for debit cards, adding £48 to a holiday for a family of four.
Sarah Brooks, director of financial services at Consumer Focus said: “Nothing is more frustrating for consumers than seeing a good online deal disappear on the final screen before booking.”
Over half of 4,500 people worldwide who had purchased an airline ticket online within the last 12 months told a recent survey by the card processing company WorldPay that they did not think surcharges were made clear enough by airlines, and 38 per cent expressed frustration at paying for using debit cards. The UK was the country where consumers were mostly likely to be sprung with last minute charges (41 per cent), ahead of Finland and Brazil.
Phil McGriskin, WorldPay’s chief product officer, said: “Customers understand that purchasing an airline ticket will involve associated taxes and charges but what really aggrieves them is a lack of transparency about what airlines are charging and why. It’s a positive step forward that airlines are pledging to be upfront about these costs.”
Peter Vicary-Smith, the chief executive of Which? - whose campaign was supported by 50,000 people - said it was important that credit card charges - which will remain - were clearly displayed throughout the booking process.
Last Christmas the Government promised to ban excessive surcharges for debit and credit charges by all travel companies by the end of this year.Reuse content