Air passengers expect to be allowed to check in a reasonable
amount of luggage without being charged an additional fee,
irrespective of the price of their ticket. A recent decision
confirms that where a flight is advertised at a certain price
"including taxes and fees", but an additional tariff will
be levied for each item of hold baggage, the airline must make
specific reference to these additional costs in its
advertisements.(1)
Facts
The applicant in these interim proceedings was an industry
association that is dedicated to fighting unfair competition. The
respondent provides air transport services and had advertised
flights in a newspaper and online at prices "starting from
...". The headline in the newspaper advertisement read:
"On the road at sensational prices." Underneath, several
destinations were listed in a chart together with the relevant
prices. Above this chart was stated: "Single flights starting
from ..." and at the bottom of the column was further noted:
"Including taxes and fees." Online, the respondent
advertised a single flight from Friedrichshafen to Pisa or Dublin
at prices "starting from €25.59 including taxes and
fees".
According to its conditions of carriage, the respondent charged for
the carriage of hold baggage at a rate of €4.50 per item
for online bookings from September 1 2006, or €7 if paid
at the airport. This charge was levied separately for outbound and
inbound flights. The fees applied to a total luggage weight of 20
kilograms (kg) per person; where this figure was exceeded, a fee of
€8 for each additional kilogram was charged.
Proceedings
The applicant objected to the advertisements as misleading
and asserted a right to forbearance. In an ex parte injunction
issued on September 26 2006 the Hamburg Regional Court enjoined the
respondent from mentioning flight prices in advertisements without
indicating that a fee was charged for each piece of hold baggage.
In a ruling issued on December 20 2006 the court confirmed the
injunction.
The respondent appealed against the judgment, while the applicant
requested that it be maintained insofar as it related to
advertisements actually placed by the respondent. The applicant
prevailed.
Decision
The appellate court ruled that the applicant's motion
requesting a cease and desist order – as clarified in the
appeal proceeding – was founded on the basis of Sections
5, 8 and 3 of the Act against Unfair Competition. The court
stressed that the average consumer would not expect an additional
fee to apply to each item of hold baggage where the prices
advertised had been stated as inclusive of taxes and fees. In such
cases the average consumer would assume that - at least for
'normal' luggage - no further costs would be
incurred.
In particular, when prices are advertised as "starting
from" a certain price, the marketplace would recognize that
some flights were being offered for a higher, unspecified price. At
the same time, the average consumer would understand that the price
advertised applied to a particular part of the offer. According to
the court, in this particular case the marketplace would understand
the respondent's advertisement for flights "starting
from..." to indicate that the price of a particular flight
would depend on the place of departure/destination (not mentioned
in the advertisement) and/or the booking date. In other words, the
specific price quoted would be available only in the best cases.
However, the average consumer would not expect that in addition to
the "starting from ..." price, a fee for hold baggage
would be charged. The statement "including taxes and
fees" rather pointed in the opposite direction, supporting an
assumption that no further fees would be incurred.
In the Senate's view, there were insufficient grounds to
support a conclusion that in the case of cheap flights, the
marketplace is aware that passengers will always have to pay extra
for hold baggage. Therefore, the court concluded that regardless of
the price paid for the flight, passengers do not view a normal
amount of hold baggage as an 'extra' for which an
additional fee must be paid.
Comment
When advertising flight prices, statutory requirements and the
criteria developed in legal practice must be observed.
The airline must advertise the final price to end consumers. The
price stated must include all price components. Net prices
"plus value added tax" or "plus airport landing
fee", for example - in other words, prices that do not
indicate the full total that will be charged - would violate
Section 1(1) of the Ordinance on the Quotation of Prices.
If no reference is made to airport landing or other fees, the
advertisement and the violation of the Ordinance on the Quotation
of Prices at the same time constitute a violation of the Act
against Unfair Competition. As a consequence, in such cases a
competitor may generally assert a right to forbearance.
In the case of internet bookings, the courts are less strict.
Within the online context, the consumer need not necessarily be
informed of the final price at the first stage of the booking
process, if the final price can be calculated only as the process
progresses and the consumer is informed of that fact.
Finally, if insufficient numbers of tickets are available at the
cheapest price advertised, the advertisement will also be
misleading under Section 5(5) of the Act on Unfair
Competition.
In this case the court rightly ruled that the average consumer does
not expect to be charged for each single item of luggage that he or
she wishes to check in. A free baggage allowance of between 15kg
and 20kg is still considered the market standard, irrespective of
the price of the ticket. If an airline wishes to deviate from the
market standard, it may do so, but in that case it must make clear
in its advertisements that it will charge for hold baggage.
However, the market standard assumed by the appellate court may yet
change - and perhaps sooner rather than later. Certain airlines
already charge for all hold baggage and this number will surely
increase. The rise in jet fuel prices is affecting not only
pricing, but also marketing and distribution.
In the meantime, the EU Regulation on Common Rules for the
Operation of Air Services in the Community has been adopted at the
second reading. The regulation states that:
"Air fares published in any form, including on the Internet,
which are addressed directly or indirectly to the travelling public
shall include all applicable taxes, non-avoidable charges,
surcharges and fees known at the time of publication."
Therefore, market standards may change, but the airlines must still
make clear what the final price is.
Endnotes
(1) Hanseatic Appellate Court, judgment of September 20 2007 (File
3 U 30/07).
(Ulrich Steppler and Christian Kusulis)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.