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Ryanair faces possible legal challenge to passenger charges

02-August-2016
02-August-2016 15:36
in Aviation and Travel
by Christopher Loxton

Ryanair has recently been made the target of proposed group litigation proceedings. An online start-up called CaseHub has recently commenced a campaign to challenge some of the charges the low cost airline levies in addition to its cheap fares.[1]

CaseHub seeks to challenge three of the charges Ryanair levies on passengers and values the claim at nearly £350m following some rudimentary mathematics. Over the last six years (the time in which such a claim must be brought according to the Limitations Act 1980) it estimates there have been roughly 410 million Ryanair flights. CaseHub has then examined statements issued by the airline over that period and has estimated that 1% of passengers will have paid to re-print their boarding card, an additional 1% will have been charged to check in at the airport and a further 0.5% will have had to pay to change the name on the booking. Applying these statistics to the number of flights each year and the level of each of the three charges (which have all varied) leads to a total figure in the region of £347m. The actual value of the claim, however, will only be for the amount paid by each customer who assigns their rights to CaseHub, rather than every charge conceivably applied by Ryanair over the relevant period. CaseHub states that it needs to have 75,000 signatories in order to bring the action, at the time of writing there were only 5,248 people signed up.

Ryanair levies a charge if a passenger checks-in at the airport rather than doing so online. This is currently in the sum of £45.00 but in 2013 is alleged to have been £70.00.[2] CaseHub state that this charge is not made clear at the time of booking. It is contended that the confirmation email from Ryanair merely states that people should check-in online in advance but it does not make clear that to fail to do so will incur a charge.

There is also a charge for printing out the boarding pass at the airport, currently at the cost of £15.00. Ryanair tells passengers to print out or download a digital boarding card to their smartphone in advance but a failure to do so will result in a charge at the airport. Ryanair has previously defended both of these charges as reflecting a legitimate cost incurred[3], although has not formally responded to this recent challenge.

As with other low-cost airlines, Ryanair’s business model is to reduce costs and pass those savings on to consumers in the form of low fares. Ryanair therefore seeks to keep overheads down by, for example, employing as few airport staff as possible. To run a full check-in service and issue boarding passes is expensive which would lead, it argues, to an increase in fares. The airline says that the charge it levies for this service thus covers the costs incurred while allowing them to keep fares low for other passengers who do not use these services. It also acts as a deterrent so people remember to get their paperwork in order and check-in at home, thereby reducing the costs to Ryanair of running the service.

The third charge CaseHub seeks to challenge is that of changing a name on a ticket. Ryanair charges £110.00 to do this online, and £160.00 for the service at the airport. The airline says it prevents bulk purchasers snapping up the cheapest tickets and then selling them on at a profit. However, CaseHub alleges that whilst that is a logical position, the charge should not be applied to those who simply make a typing error in the booking and are then unable to fly unless the name is changed, particularly as it is unlikely to be detected until the flight is about to depart, giving the consumer little choice but to pay £160.00. CaseHub asserts that this charge is not made clear to consumers and operates as a hidden charge.

CaseHub asserts that all three charges contravene EU law. One function of EU Regulation (EC) No.1008/2008 (“Regulation 1008/2008”) is to control the pricing of airfares within the EU, and the way in which such prices are communicated to consumers for the purpose of allowing passengers to accurately compare prices which the airlines are free to set.

Chapter 4, Article 23(1) of the Regulation 1008/2008 compels airlines to include in the final price to be paid all taxes, charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. The breakdown of this final price must be specified. It goes on to direct that any ‘optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the customer shall be on an "opt-in" basis.’

These rules are applied consistently across the EU as they are in the form of a Regulation. However, each member state, according to Article 24, shall lay down its own rules to ensure compliance with the Regulation through penalties that are ‘effective, proportionate and dissuasive’.

In England and Wales, customers have the right to seek redress against airlines pursuant to the Consumer Protection (Amendment) Regulations 2014. Consumers, for these purposes, have the right to then bring an action for any breach of regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008, secondary legislation brought in to implement the Unfair Commercial Practices Directive (2005/29/EU). It would be a breach of the legislation if, inter alia, the airline deceives or is likely to deceive an average consumer by way in which it communicates either the price or the manner in which the price is calculated (a so-called ‘misleading action’ in the 2014 Regulations). A breach can entitle the consumer to claim for damages or a reduction in the price paid for the services supplied.

In this jurisdiction, the Office of Fair Trading (‘OFT’) and the Civil Aviation Authority (‘CAA’) have been given the power and duty to enforce Regulation 1008/2008 by virtue of the Operation of Air Services in the Community (Pricing etc.) Regulations 2013. In March 2013, the OFT and CAA jointly produced a document entitled Guidance on the requirements of consumer law applicable to the sale and advertising of flights and holiday’ which set out their approach to the Regulations and how they are enforced within the jurisdiction. At paragraph 2.10, the OFT and CAA state that in their opinion the obligation to communicate price information is fulfilled ‘by providing a link to a comprehensive list of the available services, and their prices, for each supplier at the start of the booking process, through, for example a ‘one-click’ link to a list of the services.’

Changes brought in by the introduction of the Consumer Rights Act 2015 also now require airlines to ensure that any contractual terms specifying the main subject matter of the contract or setting its price are both ‘transparent’ and ‘prominent’. A term will be prominent if it has been brought to the consumer's attention in such a way that the average customer – who is well-informed, observant and circumspect - would be aware of the term. If a term is neither transparent or prominent it is void against the consumer under Part 2 of the 2015 Act.

It is unclear how CaseHub will actually frame its case. It could either be argued that the services for which Ryanair charges are unavoidable and foreseeable and so must be included in the base price of the air ticket; or that they constitute ‘optional price supplements’ which have not been communicated and advertised in compliance with the Regulations.

It appears from CaseHub’s criticism of Ryanair’s conduct that the charges are not ‘unavoidable’, particularly as they are only levied in 2.5% of cases, according to CaseHub’s own estimates. Further, it could be difficult to argue such services are unavoidable after the Court of Justice of the European Union (“CJEU”) in 2014 found that the cost of checking-in luggage was avoidable and so could be subject to a supplemental charge.

In the case of Vueling Airlines SA v Instituto Galego de Consumo de la Xunta de Galicia (C-487/12), the CJEU found in favour of the low-cost airline, Vueling, in a challenge over the price it charged passengers for checked-in baggage. The Court held that checking-in luggage was not compulsory or necessary for the carriage of passengers. On that basis, the cost of such luggage was not an unavoidable and foreseeable element of the air fare, but could be an optional price supplement for an additional charge. In this instance, the Court was not required to determine whether the advertising requirements had been complied with. Hand luggage, on the other hand, was found to be an unavoidable element of carrying passengers by air and therefore could not be made subject of additional charges.

CaseHub will therefore likely contend that the charges are optional price supplements which have not been advertised in accordance with Article 23(1). CaseHub could argue that these prices were not communicated in a clear, transparent and unambiguous way at the start of the booking process and accepted by the customer ‘opting-in’. This, CaseHub would argue, would leave Ryanair liable to paying compensation to it passengers for having purportedly misled them about the price to be paid when booking.

In order for Ryanair to defend this case, should it be commenced, it will need to show that its charges are unavoidable and foreseeable and that an appropriate breakdown of the charge was provided, or that if they are supplemental services that they were properly advertised and the customers opted in to paying them. On its website, these charges are included in a list of such other supplemental fees as the cost for bringing golf clubs or skis on board[4]) and so the airline could well be able to show that they are supplemental services properly advertised.

The OFT and CAA have said that publishing the full breakdown of prices on an easy-to-reach web page will likely mean Ryanair is compliant with the aforementioned Regulations. It is therefore difficult to see how such a compliant communication (which would therefore be clear, transparent and unambiguous) could also be found to be deceiving to the average consumer. In any event, the right to claim damages only arose from 1 October 2014 when the 2014 Consumer Protection (Amendment) Regulations came into force, so any claims relating to contracts entered into before that date will not have such a remedy open to them.

CaseHub requires an additional 70,000 additional signatures to reach its target of 75,000 to commence the claim and it is unclear how they would succeed when the Office of Fair Trading has stated that the means by which Ryanair communicates its charges to customers is prima facie Regulation-compliant. Ryanair could be vulnerable if the web page was not in its current form when some of the contracts were entered into, thus depriving them of that defence. It therefore seems apparent CaseHub has a long way to go to get this proposed claim off the ground to mount a serious challenge against the airline.

 

[1] Available here: https://casehub.com/cases/ryanair-class-action-passenger-fees

[2]https://casehub.com/blog/ryanairs-airport-check-fee

[3] http://www.holidayextras.co.uk/news/airport/ryanair-raises-check-in-charges-4534.html

[4]https://www.ryanair.com/gb/en/useful-info/help-centre/fees

 

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