According to the European Consumer Centre Network’s report “The Cost of Paying” 73% of the airlines imposing payment card fees do not indicate the price supplement in a clear, transparent and unambiguous manner at the start of the booking process, as required by Article 23(1) of Regulation [EC] No. 1008/2008 on air services. As regards currency-related charges consumers are often vaguely informed, if at all, about the price increment that may result from paying in a different currency.
47% of the airlines checked levy payment card fees on customers when buying flight tickets online. Whilst most airlines do offer the possibility to pay using payment methods that attract no fee, these payment methods are not always widely available and, in some cases, offer limited functionality.
The report also found that approximately one third of the airlines examined charge consumers exchange rates in excess of those imposed by the major market players and, of these, approximately 50% charge consumers in excess of 5% above market exchange rates for such transactions. In one case examined, the price increase was as high as 13.03% for simply selecting a different currency to complete the transaction.
This study shows that consumers may unknowingly pay different amounts when paying for a flight with certain airlines using different currencies, where the price increase may be well above market exchange rates. This study also calls for a detailed examination of the choice of payment methods offered to consumers in order to avoid additional price increments, as such a choice is certainly limited in many cases.
The report aims to raise awareness among consumers, enforcement authorities and policy-makers about the current state of play and emerging practices of these two elements in the booking process and calls on enforcement authorities across Europe to monitor the level of compliance by airlines in their jurisdiction.
According to Juan Bueso of ECC Ireland, "This study found that the current situation leaves great room for improvement. Consumers should be able to work out the price of their flights (airfare, taxes and charges) from the beginning of the booking process, without having to go through the different technical steps of the booking before reaching the payment stage to discover the final price. Payment card fees do not appear to be competitive and even those cards that are accepted at no extra cost often suffer from limitations. Likewise, any unjustified price discrimination resulting from the choice of currency, or the country selected, or the type of card used to pay for the flights should be avoided. Such practices are a gateway to consumer detriment and damage consumer confidence and fair competition."
Case Study from the Report
An Irish consumer booked a flight with a UK airline and the price was displayed in British pounds (357.41 GBP). However, since the consumer's credit card was in Euro and the airline operated a Dynamic Currency Conversion (DCC) scheme, the transaction was completed in EUR. The consumer did not notice that by simply entering his credit card details this action triggered a change in the currency. The airline charged him 452.98 EUR, i.e. 11.29% above the applicable Visa exchange rate on that day. Although the amount in EUR was displayed on screen, there was no information regarding the exchange rate applied by the airline. The terms and conditions simply state that fares, taxes and charges are "payable in the currency in which they are published". The consumer would have been better off paying in GBP, allowing his bank to apply their 1.75% exchange rate fee on top of the applicable exchange rate. Instead, the consumer ended up 38.85 EUR out of pocket as a result of the currency conversion applied by the airline. UK ECC contacted the airline in question but the latter simply argued that the consumer selected to pay in EUR, so that the currency was changed "at the exchange rate [the airline] was using on that day" and that the full cost breakdown box "had displayed this information clearly before [the consumer] completed the booking process". No refund was issued.
The full report can be downloaded here or from www.eccireland.ie.
For more information, please contact: Juan Bueso on 01-8797645 or 087 920 7959 or firstname.lastname@example.org.
The report was led by ECC Ireland who was assisted by a working group composed of members of ECC Czech Republic, ECC Malta and ECC Poland. 55 European airlines were checked and their websites formed the main source of data for the study. Participating ECCs provided detailed information in the form of screenshots which enabled the Working Group to assess the different currency and payment options presented by each airline. The information contained in the airline's terms and conditions was also checked to assess the quality of the information in relation to currency and payment card fees, where applicable.
The European Consumer Centres Network (ECC-Net) comprises 29 centres in Europe, and is co-funded by the European Commission's Directorate General for Health & Consumers and by the Member States, Iceland and Norway. The aim of the network is to create consumer confidence in the internal market by providing consumers with information on their rights under European legislation, and giving advice and assistance in the resolution of their cross-border disputes.