Airlines partially cave in on card charges

19th July 2012  

Following enforcement action by the Office of Fair Trading (OFT), 12 airlines have agreed to include debit card surcharges in their headline prices, rather than adding them as a ‘hidden fee’ at the end of the booking process. The OFT’s investigation has also encouraged the airlines, which include EasyJet and Ryanair, to make surcharges for credit cards more transparent.

Super-complaints and the OFT

The OFT launched the 90-day investigation, after a ‘super complaint’ from the independent consumer group Which? highlighted the increasing anger reported by travellers, who felt that debit and credit card surcharges were excessive and sprung at the and of a long booking procedure. As a consumer body, Which? has special powers with which to alert the OFT on consumers’ behalf.

According to the Which? super complaint, consumers were paying an estimated £265,000 per day in surcharges alone, adding up to a wallet-busting £40,000,000 per year. To highlight this situation and spark debate in the House of Commons, the consumer group sent the Treasurer Mark Hoban 40 cupcakes, each bearing a ‘Stop the Surcharge’ logo. The super complaint was upheld on June 28th 2011, with the OFT promising to end excessive surcharges by the end of 2012.

The Online Equivalent of Cash

The OFT’s core argument was that there should be no charges for debit cards as these are “the online equivalent of cash” and the price people see is the price they should pay. However, credit cards are still subject to surcharges, as they are significantly more costly to process. In spite of this, all 12 airlines have agreed to a policy of transparency, so that customers can easily detect just how much the transaction is going to cost them. Most airlines are expected to have changed their advertising policies by 1st August, with restructuring of the online booking procedures to follow swiftly after.

Chief Executive of the OFT, Clive Maxwell, 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.”

In addition to Ryanair and Easyjet, Aer Lingus, BMI Baby, Eastern Airways, Flybe, German Wings, Jet 2, Lufthansa, Thomas Cook, Thomson and Wizz Air have agreed to dispense with debit card surcharges and openly advertise how much credit card users will be paying.

However, this legislation may have further ramifications for other companies and services: the government wants to ensure that other sectors follow suit. This could even cover cinema ticket bookings and surcharges imposed by booking agencies and councils.

Consumer Repercussions?

Peter Vicary-Smith, Chief Executive of Which?, applauds the progress but worries that there might be other repercussions for the consumer. He said

“It is good news that debit card surcharges will be displayed in the headline price of flights – as long as the airlines do not use this as an excuse to push their prices up.”

As the system stands, it is harder for consumers to make an informed choice as to whom to book with, as the full price of the transaction isn’t revealed until the last minute.

However, debit card users can be reassured that, for once, their cards have an edge over their more widely accepted counterparts.

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