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.