First, the bad news: European airlines still routinely deceive customers when it comes to air fares, according to a new report by the EU. But there’s also good news — it’s not happening as often, thanks to tighter government regulation.
“Many people are attracted to buying a ticket from one of these sites by their very low prices,” says the EU’s chief consumer advocate, Meglena Kuneva. “However, what they do not realize is that the price quoted does not include items such as tax, etc. In the end the person ends up paying much more than was initially advertised. This is clearly forbidden by EU law.”
Kuneva, who made the comments on her blog this morning, unveiled the results of the work the EU undertook over the last two years to clean up airline ticket selling Web sites.
“There were – and still are – serious problems in this area,” she notes, adding, “There is more work to be done.”
The outcome of the work we have done in this field is encouraging. In 2007 the Commission coordinated a simultaneous investigation of airline Web sites by the national authorities that enforce consumer legislation, known as a “sweep”. Many serious breaches were discovered. Almost all of these infringements have now been resolved, and I’d like to congratulate the national authorities for their work on this. Of course, things are by no means perfect and we still have work to do.
Of 67 airline sites examined, 16 complied fully with EU legislation and are committed to maintaining these standards, Kuneva says. Another 40 airlines immediately gave the EU a commitment to correct their sites when they were informed about the problems identified.
The EU leads the world when it comes to consumer protection for airline passengers. But it needs help. In a gesture that would be unthinkable in the United States, the commissioner appealed to passengers for help.
Most importantly, you, the consumer, have a decisive role to play in keeping up pressure on airlines not to continue or slip back to unacceptable behavior. Nobody is better placed than the customer to immediately spot dubious practices and to complain to companies, to consumer bodies and to their national authorities.
If airlines know that consumers are well-informed and watchful, and will not let them easily get away with illegal conduct, the likelihood is much higher that they will play by the rules.
Wouldn’t it be nice to see the government take the passenger’s side here in the States, for a change?
It’s an early Christmas present for air travelers: The European Union’s top court has ruled that passengers must be compensated if an airline cancels a flight for technical reasons, unless “extraordinary” events are to blame. And it said an airline must prove the circumstances are “extraordinary.”
Airlines have been dreading this day for years. Paragraph 12 of EU 261 defines an “extraordinary” circumstance as on that “could not have been avoided if all reasonable measures had been taken.” But the airlines have defined “extraordinary” in its broadest possible terms — including preventable mechanical delays and crew problems, as I’ve reported.
The European Court of Justice tightened the definition, saying “extraordinary” circumstances include a defect revealed by the manufacturer or acts of sabotage or terrorism.
The case involved a lawsuit against troubled Alitalia by an Austrian family. An engine defect on an Alitalia plane meant that the Austrian couple were unable to take their scheduled flight from Vienna to Brindisi via Rome, and the Italian carrier transferred them to an Austrian Airlines flight instead.
The Alitalia flight reportedly was canceled five minutes before the scheduled departure time, and the couple arrived at their destination nearly four hours late. The Alitalia plane’s defect had been discovered the day before.
Alitalia refused to pay the plaintiff, Friederike Wallentin-Hermann, compensation of 250 euros and 10 euros for telephone charges.
Wallentin-Hermannf took Alitalia to court in Vienna, and the Austrian Commercial Court asked the European Court to define the concept of “extraordinary circumstances” that could exempt an airline from paying compensation.
The court ruled the following (to access the full text, search for C-549/07):
A technical problem in an aircraft which leads to the cancellation of a flight is not covered by the concept of ‘extraordinary circumstances’ within the meaning of that provision, unless that problem stems from events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control.
The frequency of the technical problems experienced by an air carrier is not in itself a factor from which the presence or absence of ‘extraordinary circumstances’ within the meaning of Article 5(3) of Regulation No 261/2004 can be concluded.
The fact that an air carrier has complied with the minimum rules on maintenance of an aircraft cannot in itself suffice to establish that that carrier has taken ‘all reasonable measures’ within the meaning of Article 5(3) of Regulation No 261/2004 and, therefore, to relieve that carrier of its obligation to pay compensation provided for by Articles 5(1)(c) and 7(1) of that regulation.
What does that mean for you? Finally, the “extraordinary circumstances” loophole has been closed. This applies to any flight to and from an EU member state, even to an American airline.
“It is now going to be difficult for airlines to keep hiding behind ‘exceptional circumstances,'” Hendrik Noorderhaven, chief executive of EUclaim, a Netherlands-based company that files compensation claims with airlines, told the Wall Street Journal.
The European Union’s new regulation on airline ticket transparency, which requires airlines to quote a fare including all taxes, fees and surcharges, went into effect Nov. 1. How will the new rules affect air travelers here and in Europe? I asked Meglena Kuneva, the EU commissioner for consumer affairs.
Q: First of all, congratulations on passing and implementing this important law for consumers. Can you tell me how the price transparency rule works?
Kuneva: These rules will ensure transparency of information for consumers so that they may confidently compare airline offers and make informed choices when purchasing airline tickets. European consumers will be better informed of the final price to be paid when purchasing an air service that departs from an EU airport.
Q: Why was this rule necessary?
Kuneva: We have all seen and been misled by some airlines advertisement campaigns offering a one way ticket for 1 Euro, only to find that the offer is limited and that additional charges significantly increase the cost of the airline ticket.
Q: Does the law apply to online and offline purchase?
Kuneva: Regardless of how a consumer purchases an airline ticket, be it online or via a travel agency, these new European rules will today oblige air carriers to publish the total air fare which is to include a breakdown of all applicable taxes, fees, charges and surcharges foreseen at the time of publication of the price.
Q: Who is enforcing the rule?
Kuneva: It is the task of the member states to ensure that these new rules are complied with. The member states are also responsible for determining effective, proportionate and dissuasive sanctions.
That being said, in order to ensure better coordination and effective cooperation between the competent national authorities, the European Commission convenes meetings with all the national authorities responsible for the application and enforcement of air transport and consumer protection law.
Q: So how would that work?
Kuneva: In the field of consumer protection, there’s a network of national enforcement authorities. In September 2007, they carried out a common action referred to as an airline sweep. Here, airline and travel agency Web sites who sell airline tickets online were checked to see whether they comply with EU consumer protection legislation.
The findings showed that half of the Web sites were found to have irregularities that required closer scrutiny, and, where appropriate, follow-up action was taken by the enforcement authorities to ensure that the sites were rectified by May 2008.
Q: Many airlines are relying on what are called ancillary revenues to make profits. How do you define an “all-inclusive” fare, and what room, if any, is left to generate ancillary revenues from things like seat assignments, luggage and in-flight meals?
Kuneva: The new regulation does not prohibit ancillary revenues such as those for luggage and in-flight meals. The purpose of the regulation is to guarantee transparency so that the fare charged from getting from Country A to Country B is inclusive of all additional taxes, fees, charges and surcharges foreseen at the time of publication of the price.
Q: What about disclosure of these other surcharges?
Kuneva: For consumers, the aim [of the regulation] is to ensure that they are fully informed of the final price to be paid for the airline ticket so as to avoid any unnecessary surprises when they reach the end of the booking process.
Ancillary revenues, as I said, are not prohibited by the regulation. However, the regulation does provide that any such optional price supplements must be communicated to the consumer in a clear, transparent and unambiguous way at the start of the booking process.
Moreover, these supplements will need to be accepted on an opt-in basis by the consumer.
Q: Why is this price transparency so important? Can’t customers figure out the final price for themselves?
Kuneva: Providing an all-inclusive end price in advertisement campaigns and during the booking process is a very important element since it allows the consumer to confidently compare prices between airlines.
Once the booking is completed, the provision of the price breakdown becomes more important as it may be useful for the passenger in case of claims – for example, reimbursement of charges or taxes when the journey is canceled.
Q: How will the EU rule apply to fares quoted in other countries – for example, in the United States?
Kuneva: The rules apply to all price indications, from both air carriers and travel agents, with regard to air services departing from an EU airport. It does not matter whether the air carrier is an EU carrier or whether it is a third country air carrier.
The important point is that if the flight departs from an EU airport, it will be subject to the new rules. In addition, European carriers are also encouraged to apply the same rules to prices of air services departing from a third country to an EU destination.
Q: Do you believe an all-inclusive pricing rule would make sense in the States?
Kuneva: On a general note, I strongly believe that we should be proud of the level of safeguards that our EU consumer protection laws provide. Only very recently, we held a conference on the “Future Challenges for EU Health and Consumer Policies” in Brussels and I can assure you that I was struck by the resounding calls for the European Commission to export our consumer laws abroad.
This is certainly something that could be considered for the future. However, my immediate priority is to ensure the highest level of consumer protection to all EU citizens is guaranteed.
Q: Are there other industries, such as cruises, which also rely on ancillary revenues to make a lot of their money, where price transparency rules might make sense? If so, are you considering expanding the current rule?
Kuneva: The new arrangements reflect the liberalized functioning of air transport in Europe and aim at creating uniform rules for transparency and competition for all.
Fair competition is good both for consumers and businesses. I have a strong belief that consumers have the right to be informed and an all-inclusive pricing does not mean the consumer is not provided with detailed information before the trip is booked and paid for.
If evidence shows that there are misleading practices applied in other industries, member states will need to examine these practices on a case by case basis in the light of the Unfair Commercial Practices Directive.
Question: We’ve had a problem with a missing flight segment that I’ve tried to resolve for the last six months. We were hoping you could help.
Here’s what happened: We had seats booked on a British Airways flight from Calgary to Rome with a connection in London. When the airline e-mailed my confirmation, I noticed that a leg was missing.
I called British Airways and asked how we were supposed to get to London. The agent informed me that our flight had been canceled but didn’t give me a reason. I asked to be rebooked on the flight for that evening and was told no seats were available. But that was wrong. When I checked online, I found that there were seats – in first class.
Our travel agent got us on a flight the next day. But we lost a day of our vacation and a night’s stay at our hotel in Rome that we had to pay for, but not enjoy. We also had to pay a 120-euro fee for being no-shows at our hotel in Rome.
It turns out our original flight had been canceled because of a lack of cabin crew. I filed an e-mail complaint, but British Airways said it canceled the flight because “circumstances were beyond their control.” Since then, I’ve heard nothing from British Airways. I’ve called, emailed and written to the airline. But there’s been no response. What should we do? – Karen Kernohan, Calgary, Canada
Answer: British Airways should have put you on the next available flight in which it had seats available, which it did.
According to the airline’s general conditions of carriage – the contract between the airline and you – it should have rebooked you on the next flight.
Rule 9, Section B number 3 promises the airline will “carry you as soon as we can to the destination shown on your ticket on another of our scheduled services on which a seat is available in the class of service for which you have paid the fare,” according to the contract.
But that’s not all it should have done for you. EU Rule 261 says you were owed compensation for the cancellation. (I won’t go into too many details, but I’ve blogged about the rule in more detail here). As I read Article 7 of the rule, you should have been offered 600 euros for your cancellation.
There’s a loophole in the rule that British Airways is taking advantage of. It says air carriers are off the hook when a cancellation occurs “in extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.”
British Airways believes a crew shortage is an extraordinary circumstance. I don’t.
Actually, the “extraordinary circumstances” excuse is commonly used by airlines flying to and from Europe. And there’s only one way to close the loophole: You have to threaten to sue them. Politely.
In your correspondence with an airline invoking circumstances, you need to mention in the first or second sentence that if this isn’t resolved to your satisfaction, you may be forced to take the matter to a European court. The airlines are nervous that a court will define “extraordinary circumstances” and that they won’t like the definition.
Like other airlines, British Airways stops corresponding with a passenger when it considers the matter closed. It doesn’t matter that you think your problem is unresolved. Few air carriers bother to put it into those terms, but some actually do. I recently saw a letter from Air Canada in which it told a passenger, “this case is considered closed and you should not anticipate a response to any further communication dealing with the same issues.”
Under most circumstances, threatening a lawsuit would be a last resort. But in a situation like this, where an airline is exploiting a contractual loophole, it would be my first move.
I contacted British Airways on your behalf, and it apologized for the cancellation. It insisted that extraordinary circumstances were to blame for the cancellation, but it agreed to refund your 120-euro no-show fee. It also sent you a $200 voucher for your trouble.
The European Union is aggressively pursuing online travel agencies that sell airline tickets under false pretenses. A new report by EU authorities reveals that 1 in 3 Web sites have been written up for “misleading advertising and unfair practices” since last fall. You don’t need me to tell you we have the same problem over here. But where’s our government?
I haven’t seen anything — not from the Federal Trade Commission, not from the Transportation Department — that indicates the federal government is paying this kind of attention to what is clearly also a problem stateside.
The EU actions, reported by Consumer Commissioner Meglena Kuneva, involved 15 EU national authorities as well as Norway. It shows that there are “serious and persistent consumer problems” throughout the European airline industry. Of 386 Web sites, 137 were followed up with enforcement action over the last 7 months for breaches of EU consumer law.
By comparison, the latest FTC actions are practically devoid of any travel-related activity, even though travel is the ninth-biggest complaint category. And the Department of Transportation let sites that sell airline tickets off the hook a few years ago with this little-noticed ruling.
Considering how much criticism the American government is getting for cozying up to its airline industry, isn’t it time authorities reexamined their role in protecting the taxpayers that fund their agencies?
Isn’t it time for them to start … doing their job?