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Wednesday, 10 August 2011

Airlines defy ruling to stop charging 'unfair' fees

By Donna Ferguson
If you’re about to book a flight for your summer holiday, beware.

Airlines are continuing to introduce ‘unfair’ and ‘misleading’ card charges, despite a ruling just weeks ago by the Office of Fair Trading (OFT) that these charges should be banned.
Not only are airlines ignoring the ruling and refusing to stop charging these fees, two airlines - Swiss Air and Lufthansa - are actually introducing new card fees. Both of these airlines will start charging £4.50 for any purchases made on a debit or credit card from November 2nd, even though the OFT has warned airlines that such charging practices are ‘misleading’.
How come airlines are able to ignore the ruling?
Unfortunately, the OFT does not have the power to legislate, only to make recommendations to the Government that such charges should be prohibited.
It is lobbying the Government to change an existing UK law, the Payment Services Regulations Act, to ban the charges.
But until MPs take notice, the watchdog is practically powerless and merely seems to be hoping airlines will comply of their own accord.
When the ruling was announced a little over a month ago, the OFT told the BBC - perhaps a little optimistically - that it expected travel companies to include their charges within their headline prices by the end of the year.
But while clarity on the total prices you have to pay upfront would make airline fares less misleading, it would not make the charges any fairer. The fact is, these charges are a rip-off - on average, it costs companies just 20p to process a debit card payment and no more than 2% to process a credit card payment.*
Yet the typical card fees that travel companies charge are significantly higher than this - and what’s worse, each one charges a different amount, making it extremely difficult to accurately compare the total cost of different fares.
Plus, they make the fees very difficult to find out about - here are the number of pages you need to go through for some of the UK’s biggest travel firms before you find out about the surcharge, according to the OFT:

Travel firm Number of pages
DFDS Seaways 8
The Trainline 7
EasyJet 6
British Airways 6
BMI Baby 6
Ryanair 4
Virgin Atlantic 4
Source: OFT
As if that wasn’t enough, the fees are almost impossible to avoid when buying online, as you usually have to pay by a card of some sort.
How much do different travel companies charge? Chauffeur, Taxis Gatwick Airport Travel
Sadly, until the Government gets its act together, the most you can do is to ensure you’re fully informed beforehand about the fees you will charged by different travel companies. Here’s a table to help you:

Trader Credit card surcharge Debit card surcharge
British Airways £4.50 per passenger £0
BMI Baby £4.50 per journey £3 per journey
EasyJet £8 plus 2.5% of transaction £8 per transaction
Jet2 7% per transaction (min £4.99) 3.5% per transaction (min £4.99)
Ryanair £6 per journey £6 per journey
DFDS Seaways 2.5% per transaction £0
Irish Ferries £5 per transaction £5 per transaction
The Trainline £3.50 per transaction £0
Rail Easy 4.5% per transaction 75p per transaction
Source: OFT
Hope is on the horizon...
The one shining hope on the horizon is that, earlier this week, the European Commission launched an inquiry into airline ‘add-on’ charges.
The commission’s vice president is going to look at whether EU rules need to be amended to ensure greater ‘price transparency’.
Unfortunately, his report will only be published in the autumn with legislative action not expected until next year. Airport journey Travel taxis
With airlines raking in £300m a year from credit card and debit card charges, I very much doubt airlines will do anything to reduce these charges until either UK or EU legislation comes into force. Instead, my prediction is that we will see more airlines and travel companies following Swiss Air and Lufthansa’s lead and actually introducing card surcharges over the coming months.

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