The Directorate General of Consumer Affairs has imposed a significant fine of €150 million on four low-cost airlines: Ryanair, Vueling, EasyJet, and Volotea. This action stems from the airlines' practice of charging passengers for hand luggage and other fees, which the Minister of Consumer Affairs under the Department of Social Rights deems illegal. The involved airlines have defended this practice as entirely legal and maintain that no final decision has been made, as the cases are still under review. The airlines can appeal this decision to the Minister of Consumer Affairs by means of a motion of appeal (“Recurso de Alzada”) for which they have a term of one month. According to media reports, all the affected airlines will appeal to the Minister. The Minister is likely to confirm the fines, in which case the airlines can take the matter to the administrative courts for review. The administrative courts are part of the judiciary system and are therefore independent from the government.
The main issue leading to the fine is the charge for carrying hand luggage in the cabin. Passengers were required to pay for carrying backpacks or handbags onboard despite not needing to check them in. The price of tickets increased unexpectedly during the purchase process, making it difficult for consumers to compare prices or make informed decisions. This practice was deemed unfair and non-transparent.
The investigation by the Directorate General of Consumer Affairs began in the summer of 2023 following complaints from consumer associations like Facua, which has been advocating against these practices since 2018. Ryanair was the first to implement a charge for hand luggage in November 2018 and received the highest fine, followed by Vueling, EasyJet, and Volotea.
Consumers are entitled to claim a refund for these additional charges. If airlines deny the refund, consumers are advised to file complaints with regional consumer authorities and take legal action, if necessary, which can be done without a lawyer for claims under 2,000 euros.
Other practices under scrutiny include (i) charging extra for reserving an adjacent seat to accompany minors or dependent persons (ii) lack of transparency in pre-contractual information about the final service price (iii)prohibition of cash payments both at the airport and onboard and (iii) establishing a €20 fee for reprinting the boarding pass at the airport.
Regulation (EC) No 1008/2008 of the European Parliament and of the Council on common rules for the operation of air services in the Community sets out various provisions governing the aviation industry within the European Union. One of its key aspects is the freedom for airlines to set prices for air services.
Article 22 of Regulation 1008/2008 stipulates that air carriers have the freedom to set fares and rates for intra-community air services. This principle underpins the liberalized market for air transport within the EU, allowing airlines to determine their pricing structures based on market conditions.
The Regulation 1008/2008 also mandates transparency in pricing. All applicable conditions for fares and rates, including limitations and charges, must be transparent and made available to the public. Airlines must ensure that their pricing policies do not discriminate based on the passenger's nationality or place of residence.
The Regulation 1008/2008 allows airlines to charge separately for optional services, such as checked baggage, seat selection, and in-flight meals, provided these charges are clear and communicated to the consumer in a transparent manner during the booking process.
However, the European Parliament has approved a petition to the commission and the Council to amend Regulation 1008/2008 to forbid charging for hand luggage. Such a petition has not yet been actioned.
The airlines' defence regarding the hand luggage charges has the following grounds:
ü Legal Basis: Airlines argue that Regulation 1008/2008 supports their right to set and adjust fares, including charges for hand luggage, as part of their overall pricing strategy. The fines proposed are excessive and highlight the ongoing uncertainty about which airlines will ultimately be fined.
ü Consumer Choice: By charging separately for hand luggage, airlines provide a basic fare that can be lower for passengers who choose to travel without additional services. This aligns with the principle of offering a range of price points to suit different consumer needs.
ü Operational Efficiency: Airlines claim that these charges help manage space and weight on aircraft, contributing to more efficient operations and reduced delays.
The penalties for these infringements can be considered serious or very serious, with fines ranging from €10,001 to €100,000 for serious infringements and from €100,001 to €1,000,000 for very serious infringements. If the illicit benefit obtained exceeds these amounts, penalties could reach between four and eight times the illicit benefit obtained, depending on the severity of the infringement.
These practices infringe Article 47 of the Consolidated Text of the General Law for the Defence of Consumers and Users and fall under the competence of the Ministry of Consumer Affairs pursuant to the provisions of Article 52bis, paragraph 5.
The airlines contend that their practices are within the legal framework established by Regulation 1008/2008, which allows them to freely set prices and charge for optional services as long as these charges are transparent and non-discriminatory.
The affected airlines plan to file an administrative appeal before mid-June if the penalties are confirmed. The Ministry of Consumer Affairs will then have three months to resolve these appeals. Should the fines be upheld, the airlines can pursue judicial remedies, extending the enforcement timeline.