The European Commission has decided to examine airlines’ increasing use of card surcharges they apply to credit and debit card purchases initiated online.
The organization’s inquiry comes as two more airlines recently announced their plans to add the fees later this year.
Deutsche Lufthansa AG and its subsidiary Swissair AG on Nov. 2 will begin to add a US$7.29 (£4.50 or 5.12 euros) surcharge on all online card payments. Both airlines operate in the United Kingdom.
Which?, a UK-based consumer-advocacy group, is challenging the move, and the country’s Office of Fair Trading has deemed the extra fees charged by airlines and other merchants as misleading, saying it could weaken competition in the marketplace. However, the agency has no enforcement authority.
“It’s unbelievable that two airlines have introduced these card fees just weeks after the [Office of Fair Trading] agreed with us that they are unfair and misleading,” Richard Lloyd, Which? executive director, said in a statement.
Which? is urging the UK’s Treasury Department to make a change to the Payment Services Directive to end at least debit card surcharges. “The Treasury must act quickly to do this before other businesses jump on the bandwagon and we all end up paying even more,” Lloyd said.
If the European Commission intervenes, it would not be through payments regulations but through “air-passenger rights,” notes Zilvinas Bareisis, a senior analyst at Celent based in the UK, tells PaymentsSource.
“They have been considering a proposed ‘one flight, one price’ ruling,” he says.
Brian Simpson, a member of the European Parliament and chair of the transport committee, wrote a letter to the commission asking it to investigate the fees.
“I am calling for the European Commission to look at how passengers are being misled and how it can force airlines to be more transparent in showing holidaymakers exactly what they’re buying,” Simpson wrote in the June 12 letter.
The commission expects to close its investigation in the fall and recommend legislative action that would take affect next year, according to a statement from the organization.
Lufthansa defended the surcharges and said its credit card processing costs are “considerable,” according to a report from travel website Travelmole.
“[The surcharges] apply to debit card bookings because our system cannot distinguish between the cards in the UK,” the airline said.
The surcharge controversy started in March when Which? filed a complaint with the UK’s Office of Fair Trading (
The investigation found substantial evidence of companies using what the agency called “drip pricing”–adding surcharges to the total price only after consumers had landed on a website’s checkout page. That practice happens often within the airline sector, where the agency estimates consumers spent some £300 million (US$480.5 million or 334.4 million euros) in surcharge fees in 2009, the report said.
The surcharging practice extends beyond the airline industry and to entertainment outlets such as amusement parks. Earlier this month, Which? targeted UK-based Merlin Entertainments Group, which adds card surcharges for online ticket purchases at four parks. Those fees range from £1 to £2.50 (
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