Airline Prices: Flights of fancy
The OFT is threatening to get tough on how airline prices are advertised. Ian Taylor reports
Sunday 13 May 2007
Ryanair has built its business on ensuring its headline fares - the first prices you see - are rarely beaten. These have seldom been the fares you actually pay, as tax and charges may be added later, although the final price may still be a bargain. But now the Office of Fair Trading has promised to crack down on web prices that do not include everything a purchaser has to pay.
Optional extras, such as meals or an allocated seat, can be excluded. However, taxes and fuel supplements must be part of any published fare or "price indication".
The OFT warned it would get tough three months ago, issuing a deadline that expired on Thursday. It did so in agreement with the travel agents' and tour operators' association, Abta, which has begun checking members' websites and threatens fines and possible expulsion for those failing to comply.
The practice of separating all kinds of charges from the price you initially see has become widespread - often justified by the claim that it brings transparency. Fuel supplements - a charge Ryanair and other budget carriers do not levy - are among the most contentious additions.
Most tour operators have been adding £30 to advertised prices for a short-haul trip and £65 for long-haul, justifying the supplement by the increased cost of fuel, although the price of oil has been at its current level for two years.
In general, tour operators are more constrained by regulations than airlines when it comes to price displays. However, the country's biggest travel company TUI, which includes Thomson Holidays, called for action against its competitors last week, complaining about the number of supplementary costs being added to holidays. Derek Jones, director of sales, said prices were misleading and customers were being "ripped off".
Ryanair responded to the OFT's tougher regime by announcing it would comply and then offering millions of flights at £10 each including tax. The offer could mean the airline ends up paying for people to fly if the tax and charges it has been adding up to now are anything to go by.
On the day the OFT deadline expired, Ryanair was offering Stansted-Berlin flights this month from £24.99 each way. However, the tax and charges added in the course of booking came to £38.44, plus £1.40 for using a debit and £3.50 for a credit card.
There was also a £10-per-bag charge for luggage. So, book with a card, as you must, and the cheapest possible return fare was not £49.98, but £78.28. With a credit card and a bag it came to £90.38.
Other carriers have been doing pretty much the same thing. An easyJet flight from Luton to Berlin the same day also displayed fares excluding tax, but added a lower amount of £25 during the booking process - plus £1 for debit and £4.95 for credit cards. By contrast, British Airways amended its site last year to show fares inclusive of tax and charges from the outset.
The OFT now expects all airlines and travel firms to follow suit on the grounds that "misleading price indications make it difficult for consumers to compare prices".
An OFT spokesman said: "Failure to comply will result in enforcement action" - potentially leading to court orders and fines. The move led the Abta chief executive, Mark Tanzer, to declare: "The days of the 1p flight have gone."
So which charges are non-optional and which can you expect to see outside an advertised fare? Taxes such as air passenger duty - £10 on an economy flight in Europe and £40 beyond - are non-optional, as are fuel supplements, security and airport charges. Abta says credit-card charges and the ticket-on-departure fees often added to late bookings should also be included in prices.
Credit-card fees will continue to be extra, as will baggage and meal charges on some airlines; the flight supplements sometimes charged from regional airports; and under-occupancy charges on some room bookings. If you feel you have been misled, the OFT and Abta are waiting to hear from you.
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