Page last updated at 12:37 GMT, Monday, 4 January 2010

Ryanair payment policy is 'puerile', says OFT

Plane in flight
Airline customers can face sizeable card-handling fees

Budget airline Ryanair has been accused of being "puerile and childish" over its payment policy by business watchdog the Office of Fair Trading (OFT).

OFT chief executive John Fingleton attacked the company for fees that Ryanair adds when customers use all but one type of credit card to pay online.

He told the Independent newspaper that the firm used a legal loophole to justify charging the extra fee.

Ryanair said their payment policy model allowed passengers "to avoid costs".

The law says that if an airline offers at least one free payment method, it is allowed to advertise cheap fares that do not include extra credit card charges.

Mr Fingleton said Ryanair had chosen a rare payment method to get around the rules.

Currently, the airline only offers a free booking service to customers who pay for tickets with a Mastercard prepaid card.

According to Ryanair, compulsory fees and charges are included in all the airline's advertised prices. But Ryanair argues that payment handling fees are discretionary.

'Taunting consumers'

According to a BBC Money Box report in November, Ryanair charges £5 per person per flight, even if all the passengers are paid for on the one card, in a single transaction.

Mr Fingleton told the Independent newspaper: "Ryanair has this funny game where they have found some very low frequency payment mechanism and say: 'Well because you can pay with that'.

"It's almost like taunting consumers and pointing out: 'Oh well, we know this is completely outside the spirit of the law, but we think it's within the narrow letter of the law'."

Ryanair is not for the overpaid John Fingletons of this world but for the everyday Joe Bloggs
Stephen McNamara, Ryanair

He added: "On some level it's quite puerile - it's almost childish."

Mr Fingleton also questioned the automatic addition of insurance to flights by airlines such as Ryanair, unless customers opted out.

Ryanair disputes this claim, saying in a statement that its insurance services are purchased by customers on an opt-in not opt-out basis.

Ryanair Head of Communications Stephen McNamara said: "Ryanair is not for the overpaid John Fingletons of this world but for the everyday Joe Bloggs who opt for Ryanair's guaranteed lowest fares because we give them the opportunity to fly across 26 European countries for free, £5 and £10.

"What the OFT must realise is that passengers prefer Ryanair's model as it allows them to avoid costs, such as baggage charges, which are still included in the high fares of high cost, fuel surcharging, strike-threatened airlines such as BA."

According to the Money Box report, the UK Cards Association estimates for credit cards, banks charge airlines between 1.5% to 2.5% of a payment in transaction fees.

It believes it is significantly less than £1 to process a debit card transaction.

That means a family of four on a return journey paying on one debit card should pay about 30p, if they were just covering the airline's costs, but would be charged £40 by Ryanair.

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