Italian antitrust procedure in respect of airlines' new hand baggage policy

Introduction
Facts
Challenges
Decision

Introduction

On 31 October 2018 the Italian Competition Authority (AGCM) ordered the Irish carrier Ryanair and the Hungarian carrier Wizz Air to suspend the implementation of a new hand baggage policy that would have charged passengers extra for bringing a standard-sized trolley (ie, up to 55cm x 40cm x 23cm) on board flights departing from 1 November 2018.

In practice, the two airlines would have allowed passengers to bring only small hand baggage (ie, up to 40cm x 30cm x 20cm) on board for free (to be stored exclusively under the passenger seat), while larger hand baggage would cost customers an extra fee of between €5 and €25 (depending on the various booking options, such as priority boarding or fidelity programmes).

Facts

The AGCM held that the 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, namely the extra cost for bringing standard-sized hand luggage that – according to the AGCM – should otherwise be included in the basic fare. The result of this practice would affect the decision making of average consumers since they would not be able to figure out the real price offered to the public or make comparisons with fares proposed by other carriers on the same routes. Following this line of reasoning, the AGCM found a breach of Articles 20, 21 and 22 of the Consumer Code (regarding unfair commercial actions and omissions against consumers) and has resolved to suspend the new hand baggage policy of Ryanair and Wizz Air. On such basis, the foreign carriers have also been ordered to refrain from any increase of costs for large hand baggage transport and to make a suitable space for the storage of hand baggage available to all passengers, either on board or in the cargo hold.

Challenges

Both airlines challenged the AGCM's decision before the Lazio Regional Administrative Court, asking for its precautionary suspension and then revocation on the merits. The arguments submitted by the claimants to support their position are similar and can be summarised as follows:

• The possibility for each passenger to bring on board a standard trolley is often prevented by limited space availability in the cabins of aircraft used for short and medium-haul routes (indeed, both airlines fly EU connections only), thus causing at least half of the passengers' hand baggage to be stored in the cargo hold at the time of the embarking procedures. On the contrary, under the new hand baggage policy, each passenger is allowed to carry on board one trolley for free, plus a bag or personal belonging (eg, a laptop case), and a surcharge is requested only to bring a second trolley of larger dimensions.
• The new hand baggage policy complies with Article 23 of EU Regulation 1008/2008 in terms of information and non-discrimination to the public, because it gives a clear indication of the final prices applied by the carriers and so no "prior separation from the fare of a predictable and non-avoidable charge" exists, as otherwise deemed by the AGCM. Indeed, passengers are informed with full transparency about the new policy when they first visit the airlines' website, before the start of the online booking process. The new policy is also carefully described under the general conditions of transport for passengers and baggage of the airlines.
• The suspension of the new hand baggage policy for all flights departing from Italian airports to international destinations (booked on the airlines' Italian websites) would have an immediate and direct impact on thousands of flights operated by the carriers every week. As a consequence, passengers would be exposed to a serious inconsistency and different treatment between various regimes, depending on the country of departure and the nationality of the website used to book the ticket.

Decision

With separate decisions given on 22 November 2018 (Ryanair) and 6 December 2018 (Wizz Air), the Lazio Regional Administrative Court upheld the challenge of both airlines and, accordingly, suspended the AGCM decisions by way of precautionary measures. The merits of the two cases will be discussed at the public hearing, which will be held before the administrative court on 27 February 2019.

For further information on this topic please contact Laura Pierallini at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713) or email (l.pierallini@pierallini.it). The Studio Legale Pierallini e Associati website can be accessed at www.studiopierallini.it.