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Buying “insurance” from the supplier is never a good idea for consumers, but it’s an excellent source of revenue for carriers.
The Autorità Garante della Concorrenza e del Mercato (AGCM) said both airlines had infringed its consumer code by not supplying adequate information or by giving misleading information.
Ryanair, which recently committed to “stop unnecessarily pissing people off” as part of an image revamp, was fined €850,000 and given 30 days to respond on how it would change its “unfair commercial practices”. EasyJet was fined a much lower €200,000 as the regulator said the airline had made the necessary changes to its booking process.
The unfair practices included a lack of transparency about the insurance policies the airlines were selling and the obstacles to making a claim.
The booking websites did not make clear the extent of the policy excess, nor that taxes and airport charges were covered, while obstacles to claimants included having to call a premium-rate phone number and pay for a certificate proving that they had not travelled, costing €20 from Ryanair or €12 from easyJet.
The regulator said this was “information which the companies already have and could be easily given to the insurance company without any burden to consumers”. Instead, the fees, phone call costs and high excesses in the policy were combined deterrents to claiming.
The AGCM noted that the combined costs could be higher than the insurance policy itself, and relatively high compared with the flight fare. Data collected by the AGCM during its investigations showed that an extremely low percentage of travellers covered had tried to claim on their insurance.
The authority also took a dim view of Ryanair’s “unfair, cumbersome and misleading” practice of opting customers in to buying its travel insurance as default. Those wishing not to buy insurance from the Irish airline have to select a “No Grazie” option nestling between Malta and Norway in a drop-down list of countries of residence.
EasyJet said it was disappointed that the authority had decided to fine it for the way it sold travel insurance. A spokeswoman said: “All of the issues raised in the decision have already been remedied in consultation with the AGCM and our insurance partner, Allianz. EasyJet will examine the decision and review its options.”
A Ryanair spokesman said: “We note this ruling and while we disagree with its findings and have instructed our lawyers to appeal, we will be amending our website accordingly.”
Selling add-ons has become an increasingly important part of Ryanair’s business model, with total ancillary revenues accounting for over €1bn or around 22% of the Irish airline’s overall revenues in 2013. However, easyJet reported last year that commission from selling travel insurance was continuing to decline, as the airline reported “non-seat revenues” of just £64m.
Low-cost airlines’ added charges have attracted the attention of regulators in the UK too in recent years. The Office of Fair Trading investigated adverts from easyJet and others in 2012 and ordered that the headline price displayed to customers, including on first flight searches, should not exclude supplementary fees for using debit cards.
This article originally appeared on guardian.co.uk