Regulator Chides Ryanair for 'Puerile' FeesMartin Hickman
Britain's top business regulator has accused Europe's biggest airline, Ryanair, of "almost taunting" passengers in a strongly worded attack on its charges.
John Fingleton, the chief executive of the Office of Fair Trading, described Ryanair's levying of fees for paying by card online as "puerile" and "almost childish", adding the carrier was only operating within "the narrow letter of the law".
Ryanair (RYAAY) advertises taxes and other fees upfront but only mentions charges for paying by plastic at the end of booking on the grounds that customers could escape the fee by using an obscure prepaid card.
The no-frills carrier—along with other airlines and ticketing agencies—is being investigated by the OFT over online pricing and advertising. Of particular concern is "drip-pricing" where shoppers only discover the full cost of a service late in the booking process, which makes it difficult to shop around.
In a rare and exclusive interview, his first for 18 months, Mr Fingleton, whose organisation has previously clashed with Ryanair, criticised the airline's "funny game".
"Ryanair has this funny game where they have found some low frequency payment mechanism and say: 'Well, because you can pay with that [the charge is optional]'," he said. "It's almost like taunting consumers and pointing out: 'Oh well, we know this is completely outside the spirit of the law, but we think it's within the narrow letter of the law'."
Mr Fingleton—whose criticism elicited an angry response from Ryanair—hopes that ironing out problems on airline websites will set standards for online shopping, which is forecast to account for half of retail sales by 2020.
Under consumer law, businesses must advertise all compulsory charges. At the payment stage online, Ryanair levies a £5 debit or credit card charge per passenger, per journey, although the cost to the company is only about 30p per payment, according to the card industry. The charges can add £40 to the cost of a return trip for a family of four—several times the airline's cheapest advertised fares.
From last month, payments by Electron card that had previously been free began to attract the fee and Ryanair switched its free option to MasterCard pre-pay. Mr Fingleton suggested that Ryanair had found "some low frequency payment mechanism" to get round the rules.
He said: "It's almost like taunting consumers and pointing out: 'Oh well, we know this is completely outside the spirit of the law, but we think it's within the narrow letter of the law'.
"On some level, it's quite puerile, it's almost childish. And you sort of smile, and newspapers like yours or BBC Radio 4's Moneybox do a good job in pointing this out to consumers. This is just playing silly games at the margins of it all and we might or might not go running after something like that."
The automatic addition of insurance to flights by airlines, including Ryanair, unless customers opted out, was, he said, another legal "grey area". But public anger about such charges might prove to be more effective than regulatory action, he said. "It would be silly to go after something like that every time because they would quickly change it to something else, and it's trying to establish a general principle that what's not optional is not in there. Consumer anger and frustration, and an element of transparency, often changes these things much quicker than legal action."
In July, Ryanair agreed to give more prominence to fees and charges on its website after the OFT's intervention. The OFT had been asked to act by the Advertising Standards Authority, whose rulings have been repeatedly dismissed by the no-frills airline, which carried 58 million passengers last year.
Ryanair responded to Mr Fingleton by referring to the OFT's ongoing inquiry into the long-running price-fixing of fuel surcharges, which eventually led to British Airways (BAIRY) being fined £121m three years ago.
Stephen McNamara, Ryanair's head of communications, said: "As a general rule, anything that comes from an office that has chosen to ignore fuel surcharging airlines like British Airways and remained mute while London air passengers were being ripped off by the BAA monopoly should be taken with a pinch of salt.
"Ryanair is not for the overpaid John Fingletons of this world but for the everyday Joe Bloggs who opt for Ryanair's guaranteed lowest fares because we give them the opportunity to fly across 26 European countries for free, £5 and £10."
The OFT needed to realise, Ryanair said, that its passengers could avoid costs such as baggage charges "still included in the high fares of high-cost, fuel-surcharging, strike-threatened airlines such as BA." The airline had become Europe's biggest because it was so cheap, he added.
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