EN 
TR Court of Justice of the European Union (“the Court” or “the CJEU”) published a press release numbered 49/20 regarding the judgment in case Ryanair Ltd. and Others v. Antitrust and Others on April 23, 2020. Consideration of the questions referred by the CJEU in the given judgment is likely to touch many companies functioning in global airline industry. Overall, the Court has concluded that air carriers must indicate the Value Added Tax (“VAT”) on domestic flights and the fees charged due to credit card and check-in payments, from the first time their price offers are published online.
The Dispute
Autorità Garante della Concorrenza e del Mercato (“the AGCM”), Competition and Market Authority in Italy and the respondent in the case, found Ryanair Holdings Public Limited Company (“Ryanair”), an airline company executing air transport services for thirty six years and the applicant in the case, responsible for various unfair commercial practices by decision of June 15, 2011. The AGCM contended that Ryanair’s online booking system did not indicate certain elements which were classified by Ryanair as optional costs, as follows: (i) the amount of VAT on domestic flights, (ii) the online check-in fees, and (iii) the fees charged when paying by a credit card other than that approved by Ryanair. The AGCM also claimed that those pricing elements were unavoidable and foreseeable, therefore consumers had to be informed of them before a booking process was commenced. To this end, the AGCM imposed fines on Ryanair in account of alleged unfair commercial practice.
Ryanair in response to the decision given by the AGCM, filed an action before the Italian administrative courts seeking the annulment of the fines. The court at the first instance upheld the decision of the AGCM and rejected the action pursued by Ryanair, relying on the grounds that the passengers’ online check-in fees and VAT applied to the fares and to the optional supplements relating to domestic flights did not constitute optional costs and together with the administrative fees for purchase made by means of a credit card had to be regarded as ‘unavoidable costs’ in the essence of Regulation No 1008/2008 of European Union (“the Regulation”). Subsequent to the decision, Ryanair appealed to the Consiglio di Stato, the Council of State in Italy. The Council of State when evaluating the rendered decision, had doubts as to the interpretation of Article 23(1) of the Regulation. So that, it resolved to stay the proceedings and refer its questions to the CJEU. The Court thereby, was asked to answer:
(i) An online check-in fee and an administration fee for credit card purchases that are additional to the price of the ticket together with the VAT applied to air fares and optional supplements for domestic flights can be considered under the category of an unavoidable and foreseeable price supplement when interpreting Article 23(1) of the Regulation?
(ii) Is the wording of Article 23(1) of the Regulation to be interpreted in the sense that the word ‘optional’ covers price supplements which the majority of consumers are able to avoid?’
Consideration of the Questions Referred and the Ruling
The Regulation establishing the common rules for the operation of air services under its Article 23(1) stipulates that, air fares and air rates available to the general public shall include the applicable conditions when offered or published in any form, including on the Internet, for air services from an airport located in the territory of a Member State to which the Treaty applies. As per Article 23(1), the final price to be paid shall at all times be indicated and shall include applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. Finally, the third sentence of Article 23(1) of the Regulation, states that the offer must at least show the airport charges and the charges, surcharges and fees related to security and fuel where those components are added to the air fare.
To answer its two questions, the Court has recalled its precedents and held that with reference to Air Berlin, the various components making up the final price to be paid, within the meaning of the second sentence of Article 23(1) of the Regulation, must be indicated from the first time the price of air services is shown. In 2012, the Court has ruled that the concept of ‘optional price supplements’ refers to price supplements which are not unavoidable, therefore relate to services which, supplementing the air service itself, are neither compulsory nor necessary for the carriage of passengers with the result that the customer chooses either to accept or refuse them. With reference to the same decision of CJEU, price supplements such as flight cancellation insurance or the carriage of checked-in baggage were considered as optional fees. However, despite its previous decisions, the Court was offered to examine the classification of the various price components at issue in the main proceedings on the basis of those foregoing factors in response to questions of the referring court in the essence of Article 23(1) of the Regulation.
To do so, the Court reiterated that air carriers must be given the possibility of offering passengers various methods of check-in that are either to be paid for or free of charge. In this regard, online check-in fees, the Court held that, where there is at least one option to check-in free of charge including physical check-in at the airport, must be classified as an optional price supplement. Therefore, since these fees are classified as optional, they necessarily have to be indicated in the initial offer. With that being said, the Court highlighted the responsibility of the referring court in order to verify whether Ryanair offered passengers a possibility of checking-in free of charge. In case it is resolved that Ryanair offered, alternatively, one or more possibilities for check-in, the fees payable for online check-in would have to be regarded as optional price supplements in accordance with the Regulation.
In the second place, the Court observed that the indication of a specific tax must always follow the price element to which that tax relates, subject to the taxes that are applicable to the air fare as regards to Article 23(1) of the Regulation. Correspondingly, if a tax applies to the air fare, it must be shown separately with that tariff from the first time the final price to be paid is indicated. The Court examined that the amount of tax must be clearly indicated in the price of optional services from the first time that they are shown in respect of clarity and transparency requirements which an air carrier must comply.
In the final place, the Court held that as regards the administrative fees for purchases made by means of a credit card other than that approved by the air carrier, it must be considered that there can be no doubt that those fees are foreseeable, since their application results from the air carrier’s policy itself subject to the method of payment. Thus, they are also unavoidable since the apparent choice for the consumer irrespective of using credit card approved by the air carrier, in fact depends on a condition imposed by the air carrier itself. It ends up with the free service is reserved for the benefit of a restricted class of privileged consumers, the other consumers being required either to refuse the service that is free of charge or not to proceed with their purchase.
Author: Ezgi Ceren Aydoğmuş
