Consumers: Low-Cost Flight Information

Lord Black of Brentwood Excerpts

Monday 27th February 2012 Lords Chamber

[Lord Black of Brentwood]

My Lords, I draw attention to the various media interests in my entry in the register. In particular, in view of my comments this evening, I highlight my directorship of the Advertising Standards Board of Finance. I thank the noble Lord, Lord Mitchell, for securing this debate. As we escape from the clutches of winter and many people think about their annual holiday, this is a timely and important subject to discuss. Many hard-pressed travellers will have cause to be very grateful to him.

At the start of my remarks, it is important to highlight three general issues with regard to the information that people receive when booking flights online. First, unfair credit card charges are not solely the preserve of the airline operators. In recent months, I have cursed at my computer screen—which is not an unusual experience in view of my technical illiteracy, but is driven by a sense of injustice on these occasions—when I have had to pay credit or debit card surcharges when buying flowers, wine and chocolate. The latter two are certainly important components of life. This practice, if thankfully not widespread, occurs on too many websites and not just those of airlines.

Secondly, where airlines are concerned, this is not a practice that is restricted to the low-cost ones. Table B1 on page 58 of the OFT report of June 2011, which is very helpfully highlighted in the excellent briefing note produced by the Library for this debate, showed that debit card surcharges were also being levied by bmibaby, Air Berlin and Jet2 at that time, while Iberia, Virgin Atlantic and British Airways were also levying a range of credit card surcharges. Although I have not personally booked flights on all these lines—I obviously need to get out a little more—I suspect that they are all levied with different degrees of transparency. Some are admirable, and I particularly commend the British Airways site, which now identifies many key costs involved in your final fee, including the amount of tax that goes to the Chancellor. Transparency is key.

My third general point is that it is always regrettable when an issue such as this is taken as an opportunity simply to bash the low-cost airlines. I know that this is not a popular thing to do but I will briefly stand up for Michael O’Leary. In recent years, he and others have transformed the airline industry, opening up parts of Europe that once no one ever visited and making air travel affordable to many who could not afford it. Like the noble Lord, Lord Mitchell, I declare an interest as a regular Ryanair passenger to Perugia. However, I think I am 20 minutes nearer the airport than he is, so I get to the cappuccino a little sooner. When levying justified criticisms about how websites operate, we should not forget the contribution that the low-cost airlines make to the consumer.

The reason why passengers feel some injustice when booking holidays on low-cost airlines is that, unlike some other transactions, the booking of a holiday is a major expenditure for consumers, for which they have often saved hard and sacrificed. The levying of a surcharge, particularly if you are not warned about it in advance and are unable to make a meaningful comparison with other airlines, is painful and unfair. However, it is not just the lack of transparency over credit and debit card charges that can be so annoying. In such a dynamic sector as the airline industry, marketing campaigns and websites often sail too close to the wind in terms of providing clear and accurate information, not just about fares and charges but about the provision of free and discounted tickets, availability, travel periods, journey time comparisons, environmental claims, airline comfort and airport names. Those of us who know people who have been stranded for an hour and a half outside Barcelona Airport, thinking that they were going to Barcelona, will know what I mean.

Since the remit of the Advertising Standards Authority was widened in the spring of last year to cover digital advertising, marketing communications on company websites, including the websites of all airlines, are now covered by the provisions and protections of the mandatory advertising codes from the Committee of Advertising Practice. Travel advertising and marketing communication is one of the ASA’s top 10 most complained about sectors. As a result, the ASA has over the years issued guidance to those involved in the travel industry to enable them to ensure that their communications keep within the codes and consumers are protected. In particular, I commend a recent guidance note for the travel industry, which was issued by the Committee of Advertising Practice. It was drawn to my attention by the noble Lord, Lord Smith of Finsbury, who does such an effective job as chairman of the ASA. It covers each of the key areas, setting out rules in a clear and straightforward fashion to ensure that consumers are protected. It is an excellent note.

The ASA is important in considering this issue because of the time that it will take for statutory regulation to deal with this area. I welcome the fact that the Government are consulting on draft legislation to bring forward the provisions of the consumer rights directive relating to above-cost surcharges. I understand that such a move will enable the Committee of Advertising Practice to tighten up its own rules even further. The CAP is currently bound by the unfair commercial practices directive, which is subject to maximum harmonisation.

I understand that the Government’s aim in this area—rightly so—is to ensure that consumers have the information that they need to compare prices readily and that pricing practices are fair. The ASA already requires all taxes and other compulsory charges paid at the point of purchase of the ticket to be clear and up front, and its systems are robust, responsive and flexible. The ASA should remain the first port of call, with the Office of Fair Trading as its statutory backstop for this thorny issue, the tackling of which is of such importance to tens of thousands of hard-pressed travellers. I would be grateful if the Minister could bear those possibilities in mind when considering this issue.