In a bid to enhance transparency for online shoppers, the UK government is poised to launch a comprehensive initiative that could significantly curb concealed fees imposed by airlines and various other sectors. This move comes in the wake of mounting concerns that numerous firms tack on essential charges at the checkout stage, subsequently inflating the overall cost for consumers.
The government’s strategy involves commencing a public consultation aimed at addressing the pervasive issue of “drip pricing,” where the final price paid during checkout exceeds the originally advertised price due to additional but ostensibly necessary fees. This practice has, according to recent government research, become “widespread” across multiple industries, amounting to a staggering annual burden of £1.6 billion for consumers.
The Department for Business and Trade will spearhead this critical consultation, set to commence on Monday and extend over a six-week period. The airline industry, in particular, has been under scrutiny for the plethora of additional services offered during the booking process, including expedited boarding, cabin baggage checks, and seat selection, often accompanied by extra charges.
The government’s concern regarding “drip pricing” extends beyond the aviation sector, encompassing various products and services, ranging from ticket fares to food deliveries. According to research findings, nearly three-quarters of transport providers, encompassing air and rail travel, engage in the practice of concealing fees within their offerings. This phenomenon is not limited to the transportation sphere, with 54% of entertainment providers and 56% of hospitality establishments also guilty of such practices.
In tandem with addressing hidden fees, the government has launched separate consultations targeting fake reviews and perplexing labelling practices. Business Minister Kevin Hollinrake emphasised that these proposals seek to furnish consumers with “the clearest and most accurate information upfront” before completing a purchase. Hollinrake further noted that modern-day shopping, whether in physical stores or online, presents consumers with an abundance of choices. However, the presence of fake reviews and obscured charges often muddies the waters, leaving customers uncertain about the most suitable product for their needs.
The government has underscored its intention to work collaboratively with industry stakeholders to ensure that these new regulations strike an equitable balance between safeguarding consumers and minimising undue burdens on businesses.
Hidden fees are not only encountered at the booking stage but can also surprise travellers at the airport if they fail to adhere to an airline’s terms and conditions. A recent incident involving Ruth and Peter Jaffe, an elderly couple charged £110 by Ryanair for airport check-in and ticket printing due to a download error, serves as a stark example.
The proliferation of “ancillary” services has become a pivotal facet of airlines’ revenue models, amassing a global total of $103 billion (£81 billion) in 2022, a stark increase from $40 billion in 2013. Airlines argue that this “unbundling” approach, separating add-ons such as food, drinks, and cabin baggage from the base ticket price, affords passengers greater choice and more competitive fares.
Despite this rationale, Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, contends that heightened interest rates amidst a burgeoning cost-of-living crisis may render passengers increasingly sensitive to ancillary costs. Streeter applauds the public consultation as a timely endeavour that is poised to shed light on the rigidity with which some companies enforce their rules.
In response to the impending consultation, Airlines UK, the trade body representing the nation’s airlines, emphasised its commitment to providing consumers with exceptional choice, service, and value, affirming their readiness to actively participate in the forthcoming consultation process.