Italian Antitrust Procedure in Relation to Airlines’ New Hand Baggage Policy – Update
By precautionary order dated 31 Oct. 2018 the Italian Antitrust Authority (AGCM) required the EU carriers Ryanair and Wizz Air to suspend the implementation of a new hand baggage policy that provides the payment of a surcharge to bring on board a standard trolley (i.e. up 55x40x23 cm) for flights departing from 1 Nov. 2018. In practice, the two airlines allow to bring on board for free only a “small” hand baggage (i.e. up to 40x30x20 cm) to be stored exclusively under the passenger seat, while for larger hand baggage customers would pay an extra-fee between Euro 5 and 25 (based on the various booking options).
The AGCM held that the mentioned new policy would cause a misleading representation of the actual price of airfares, because the operators would exclude a predictable and non-avoidable charge from the final price of the air transport service. The result of this practice would affect the decision-making of average consumers, since they would not able to figure out the final price, nor to make a comparison with fares proposed by other carriers. On such basis, the AGCM found a breach of Article 20, 21 and 22 of the Italian Consumers Code (re: unfair commercial actions and omissions against consumers) and resolved to suspend the new hand baggage policies. Both airlines decided to challenge the AGCM precautionary orders before the Italian Administrative Court (TAR), asking for its precautionary suspension and then revocation on the merits. The arguments to support the claimants’ position can be summarized as follows: (i) the possibility for each passenger to bring on board a standard trolley is often prevented by limited space availability in the cabin of aircraft used for short and medium-haul routes, thus causing at least half of the passengers’ hand baggage to be stored in the cargo hold. On the contrary, under the new policies, each passenger is allowed to carry on board one trolley for free, plus a bag or personal belonging (such as a laptop case), and a surcharge is requested only for a second trolley of larger dimensions; (ii) the new policies are compliant with article 23 of Regulation (EC) 1008/2008 in terms of information and non- discrimination to the public, as they give a clear indication of the final prices and so it does not exist any “prior separation from the fare of a predictable and non-avoidable charge”, as otherwise deemed by the AGCM. Indeed passengers are informed with full transparency about the new policies at the start of the booking process on the airlines’ website; (iii) the suspension of the policies for all flights departing from Italian airports to International destinations (booked on the airlines’ Italian website) would have a direct impact on thousands of flights operated every week, since passengers would be exposed to a different treatment based on the country of departure and nationality of the website used to book the ticket. With separate decisions on 22 Nov. 2018 (Ryanair) and 6 Dec. 2018 (Wizzair), TAR upheld the challenge of both airlines and, accordingly, suspended the AGCM precautionary orders by way of provisional measures.
On 21 Feb. 2019 the AGCM closed the administrative procedures imposing pecuniary fines to both airlines for unfair commercial practices (in the amount of Euro 3 million to Ryanair and Euro 1 million to Wizz Air) and confirming the order to interrupt the application of the subject policies. The airlines will now challenge the AGCM final resolutions before TAR and, in view of this challenge, the same TAR has postponed the public hearing to discuss the cases on the merits from 27 Feb. 2019 to 2 Oct. 2019.
This article was originally published by Marco Marchegiani of Studio Pierallini.