The EU Court of Justice clarifies transparency of flight prices

On 23 April 2020, in the case between Ryanair and the Italian Competition Authority, the Court of Justice of the European Union clarified the transparency obligation of air carriers to indicate unavoidable and foreseeable costs at the time of publication of the flight price on the internet.

The present case began in 2011 when the Italian Competition Authority sanctioned Ryanair for publishing flight prices which did not indicate certain elements which Ryanair qualified as optional, namely check-in fees, VAT applied to domestic flights and administrative costs linked to payment by credit card. Considering these elements unavoidable and foreseeable and that the consumer should therefore be informed of them at the time of publication of the flight price, and not during the reservation procedure, the Competition Authority fined Ryanair over EUR 500,000 for unfair commercial practices. 

After the Regional Administrative Court for Latium rejected Ryanair’s appeal, Ryanair appealed to the Italian Council of State, which decided to refer the case to the EU Court of Justice for a preliminary ruling. The Council of State asked whether, on the basis of Article 23, paragraph 1 of Regulation (EC) n°1008/2008 on common rules for the operation of air services in the Community, the costs at issue should be interpreted as falling within the category of unavoidable and foreseeable price elements or that of optional costs. 

The Court confirmed that the VAT for domestic flights along with the credit card payment charges (and check-in costs if there is no free check-in method) fall within the category of unavoidable and foreseeable elements and must therefore be indicated at the time of publication of the flight price on the internet. Optional supplements (such as additional luggage) must, on the other hand, be indicated in a clear, transparent and unambiguous manner at the beginning of the booking procedure.

It is now up to Italy to dispose of the case in accordance with the EU Court of Justice’s interpretation. If a similar issue arises in another Member State, the latter will also be bound by the Court’s decision. 

It is noteworthy to mention that on 20 February 2019 the Italian Competition Authority also fined Ryanair (and Wizz Air) for unfair commercial practices in light of their new rules on hand luggage (requiring the passenger to pay for hand luggage that does not fit under his/her seat). As hand luggage is an unavoidable and foreseeable supplement, it must be indicated at the time of publication of the flight price on internet, the Authority considers that this practice allows Ryanair to increase its prices in a non-transparent manner. Nevertheless, the Regional Administrative Court of Latium annulled the decision, explaining that Ryanair did not impose any restrictions on the weight of the hand luggage, and that, in the absence of regulations laying down minimum rules, the airline was free to adapt its hand luggage policy. Meanwhile, in November 2019, a Spanish court also considered Ryanair’s hand luggage policy “abusive” and declared that it could no longer be applied in Spain. To be continued…