Are airlines wrong to charge admin fees?

By Chris Torney

Personal finance editor of The Express, and freelancer for Confused.com Chris Torney comments on the fight over airline administration fees.

A bit of a spat broke out recently between budget airline Ryanair and Which?, the consumer group.

Which? has submitted a formal “super complaint” to the Office of Fair Trading about the surcharges imposed by various companies and organisations when customers pay with credit and debit cards.
(Certain consumer charities and campaign groups are allowed to make super complaints: the OFT is obliged to investigate them and report back within 90 days.)

Some councils, for example, charge card-payers a 3 per cent fee when they settle parking fines, while travel firms routinely charge even more for customers who pay with plastic. Even the DVLA gets in on the act: there’s a £2.50 flat fee for buying tax discs by credit card.

Ryanair was named by Which? as one of the worst offenders – it charges £5 per person per journey as an “administration fee” for holidaymakers who pay with their bank’s credit or debit card. A family of four, therefore, would have to pay an extra £40 for a return trip.

But Ryanair spokesman Stephen McNamara, a man who rarely minces his words, told reporters Which? did not know what it was talking about, and added: “Before making ‘Super Duper Complaints’ the clueless clowns at ‘Which, Who or What’ magazine, should conduct some basic research. Ryanair does not levy any credit or debit card payment ‘surcharges’.” Charming stuff.

McNamara’s contention is that the fees are to cover administrative costs, such as running the website, as well as dealing with transactions. He also pointed out that the £5-per-trip charge could be avoided by paying with a pre-paid Mastercard – a kind of pay-as-you-go credit card that can be set up for an initial fee of as little as £4.95.

Clearly, from a consumer’s point of view, these charges are not ideal. But is anyone surprised any more at the array of extra fees – for baggage, checking in, printing boarding passes, and so on – that so many “low-cost” airlines charge?

If you didn’t already realise, then let me make it clear: for the majority of travellers, the ticket “price” quoted on a newspaper advert or at the start of the booking process is likely to be some distance from what you actually end up paying.

The OFT may well uphold Which?’s complaint and outlaw these administration or payment fees. But it’s hard to escape the suspicion that, were Ryanair and its ilk to be banned from imposing these particular surcharges, they’d just put costs up elsewhere.

I can see the logic in stopping councils or bodies like the DVLA imposing the fees, as in these cases it’s not possible for individuals to take their business elsewhere. But when it comes to airlines, the market is pretty competitive: if you don’t like the way Ryanair or easyJet operate, you don’t have to fly with them.

The best solution is for consumers to get clued up about when they’ll face extra fees, and work out how to avoid them. That’s likely to be much more effective than waiting for watchdogs like Which? and the OFT to sort things out for you.

• Do you think the low-cost airlines’ charges are fair? What are your tips for saving money on flights? Let us know by adding your comment below… 

Comments

[flights to manila]

I think admin fees are not necessary. Airline companies make a lot with surcharges as well as advertisements.

[virtual office makati]

Administration fees have to be reviewed. It should already be included in the fare.

[caravan parks]

Airline companies must clue in customers about when they’ll face extra fees, and work out how to avoid them so that the customers will be satisfied.