Airlines agree to be upfront about surcharge fees


Airlines continue to make extra money off of debit card surcharges -- yet now, a dozen of them have agreed to be more honest about them.

Aer Lingus, BMI Baby, Eastern Airways, easyJet, Flybe, German Wings, Jet2, Lufthansa, Ryanair, Thomas Cook, Thomson (TUI) and Wizz Air have confirmed they will now include debit card surcharges in their advertised prices -- and disclose credit card surcharges more clearly during the booking process. surcharge-fees

What is the surcharge fee controversy all about?
Surcharges are extra fees airlines tack on to the cost of a ticket for the privilege of paying with a debit or credit card. Because these fees are usually not disclosed until the very end of the booking process, they can be a surprise for customers.

In March 2011, consumer group Which? filed a super-complaint with the Office of Fair Trading (OFT) about the surcharge fees. Two months later, the OFT upheld Which?'s super-complaint, agreeing that surcharges were problematic for many consumers. Which? had argued that the charges were often unfairly high, with the fees potentially adding as much as £40 to the cost of return flights for a family of four.

The latest developments
The OFT vowed to take action and ban excessive surcharges by the end of 2012. In June 2012, with no progress made towards the ban, Which? criticised the government of stalling.

Then, in July, the OFT announced that although airlines may continue to charge surcharges for the time being, they  must take extra measures to disclose them from the beginning of the booking process.

By August 1, airlines and other businesses must:

  • Include the cost of paying by debit card in their headline prices.
  • Make the extra charges for credit card payments (which are pricier for airlines to process) more transparent by revealing them early in the booking process.

Despite previously claiming they were within their rights to impose these charges, 12 of the airlines investigated by the OFT have agreed to comply with the new regulations -- and a handful (including easyJet, Flybe and Ryanair) have already made changes to their websites.

Future government action could affect credit card fees
While the latest announcement undoubtedly represents something of a victory for consumers, there could be more good news in the future. The government has reaffirmed plans to introduce an outright ban on excessive debit and credit card surcharges by the end of the year.

Clive Maxwell, chief executive of the OFT, welcomed the "great" outcome in a statement.

"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," Maxwell said.

Peter Vicary-Smith, chief executive of Which?, also welcomed the OFT's results, "as long as airlines don't use this as an excuse to push up their prices."

"It's also important that credit card charges are clearly displayed throughout the booking process and the OFT should make sure that all companies are taking these steps, not just airlines," he said.

See related: Airlines still charging fees ahead of surcharge ban, OFT demands credit card surcharge transparency

Published: 12 July 2012