Opposite views have emerged amid speculation that the government aims to clamp down on ‘drip pricing’ in the King’s Speech today (Tuesday).
How airlines present ‘hidden’ fees is expected to be tackled under the expected proposals, without going so far as to impose a ban on extra charges,
So-called drip pricing, where low cost carriers in particular promote a low price that excludes add-ons such as seat selection, check-in bags and priority boarding, has long been criticised by consumer groups.
The issue has again been highlighted in the wake of Ryanair announcing surging half-year profits of almost 60% on Monday to €2.18 billion in the back of higher fares.
Meanwhile, the Financial Times reported that surging ticket prices have prompted the European Commission to say its officials were “looking into detail . . . of what is exactly going on in the market and why”.
Brussels does not have the power to regulate air fares but the intervention adds to pressure on airlines over the recent rises, triggered by supply chain problems and booming demand.
Barclays revealed that research shows that more than four in ten (43%) consumers have noticed more examples of drip-pricing when shopping online.
The extra fees and changes added during the checkout process result in them paying a higher total than the price advertised.
Of this group, almost half (47%) have noticed examples of “drip-pricing” when buying airline tickets, while a third have seen it booking hotel rooms (35%) and live event tickets (32%).
The bank’s proprietary spending data, based on millions of customer transactions, covering nearly half of all credit and debit card transactions, shows that spending on travel and entertainment has remained resilient throughout the year.
Barclays director Esme Harwood said: “Despite a slowdown in discretionary spending, our proprietary data shows that consumers are prioritising spending on experiences – such as holidays, festivals and concerts.
“However, consumers are increasingly discerning, particularly in light of rising prices. Our research demonstrates that ‘drip-pricing’ has not gone unnoticed, as shoppers pay close attention to value for money, both in store and online.”
Which? Travel editor Rory Roland said: “Our latest research has found air fares are at record highs, with the price of tickets rising at a rate that has massively outstripped inflation.
“On top of this, airlines are feathering their nests with a dizzying array of extra charges for everything from guaranteeing a seat with your family to taking a full-sized piece of luggage – fees which only continue to soar.”
However, doubts exist over how any reforms would be policed with Ryanair finance director Neil Sorahan warning against state interference in pricing policies.
He told the Telegraph: “It’s wrong, first and foremost, to get involved in pricing strategies of any business, regardless of what sector it’s in.
“It’s better if governments stay out of pricing strategies and let supply and demand figure out which way it’s going to go.”
Laura Busby, commercial director a TMC Good Travel Management, argued that drip pricing “offers more flexibility for the consumer to cut costs where they see appropriate”.
She said: “The problem lies in the occasional lack of clarity that has been demonstrated across a variety of industries when it comes to drip pricing.
“Often, these add-on costs are not made clear enough from the outset and could easily be interpreted as ‘hidden fees’.”
She added: “The travel industry has only just begun to see a full recovery from the impact of the pandemic, and a sharp increase in plane fares will only hinder the progress that has been made in getting people back on board.
“I’d welcome a review from the government to set a standardisation of frameworks for airlines that improve transparency and make purchasing travel products simpler.
“However, I don’t agree scrapping drip pricing is the way forward. This will only mean taking away choice from holidays and business travellers, resulting in higher fees in the future.”
The King’s Speech this morning is where King Charles reads out the government’s plan for the coming months at the State Opening of Parliament.