Spain hits budget airlines with historic €179mn fines for 'abusive practices'

In a landmark move, Spain has fined five budget airlines a total of €179mn for what it calls "abusive practices" that exploit consumers. The penalties, the largest ever imposed by the Spanish Consumer Rights Ministry, target practices such as charging passengers for hand luggage, seat reservations, and other hidden fees.Ryanair, Europe's largest low-cost carrier, received the heftiest fine of €108mn. EasyJet followed with a €29mn penalty, while Vueling, Norwegian, and Volotea were fined €39mn, €1.6mn, and €1.2mn respectively.Spain’s Consumer Rights Ministry accused these airlines of misleading passengers and failing to provide transparent pricing, which undermines consumers' ability to compare ticket prices effectively. According to the ministry, these practices constitute violations of both Spanish and EU laws.Michael O’Leary, CEO of Ryanair, has strongly opposed the decision, labelling it as "illegal” and "baseless.” O’Leary vowed to appeal the fines, potentially taking the matter to EU courts. Other airlines, including EasyJet and Norwegian, have also indicated their intention to challenge the penalties. The Spanish airline association, ALA, has joined the chorus of opposition, arguing that the decision infringes upon EU free market regulations.The ministry’s crackdown was partly fuelled by consumer frustration over what many view as the erosion of basic travel rights. Ryanair was singled out for a range of practices, including charging passengers for larger carry-on luggage, seat selection, and even printing boarding passes at the airport, which the ministry described as "disproportionate” fees."It is an abuse to charge €20 for just printing the boarding card at the airport, [it's] something no one wants,” said Andrés Barragán, Spain’s secretary general for consumer affairs.Advocacy groups like Facua, which has campaigned against these fees for years, hailed the decision as "historic” and a major victory for consumers across Europe.The fines bring into sharp focus the business model of low-cost airlines, which has long depended on offering ultra-cheap base fares while charging for a slew of additional services. While these airlines have arguably help revolutionise air travel by making it affordable for millions, their reliance on ancillary revenue streams has drawn criticism.For budget carriers like Ryanair and EasyJet, ancillary revenues — fees for services like checked luggage, priority boarding, seat selection, and in-flight purchases — are a lifeline. These fees can make up a significant portion of their income. In 2023, Ryanair derived over 40% of its total revenue from such charges.The strategy is deliberate. By offering low upfront fares, these airlines attract cost-conscious travellers, but they recoup their profits through charges for everything beyond the seat itself. For instance, a passenger might pay €20 for a ticket, only to find the final cost increasing to over €100 once baggage, seat selection, and other extras are added.This approach, while effective, has raised questions about transparency. Critics argue that the practice of "unbundling” services makes it harder for consumers to understand the true cost of their travel. It’s this lack of clarity that Spain’s Consumer Rights Ministry sought to address with its fines.Spain’s actions reflect growing frustration among consumers across Europe. Many feel trapped by policies that force them to pay for essentials like carry-on luggage or sit next to their travelling companions. Families, in particular, often find themselves having to pay extra to ensure that children are seated with their parents—a practice the Spanish ministry has vowed to ban outright.The move also highlights a broader trend towards increased regulatory scrutiny of budget airlines. Consumer protection groups have long argued that these carriers take advantage of loopholes in EU legislation, and Spain’s decision could set a precedent for similar actions in other countries.Barragán underscored the international relevance of the issue, noting: "This is a problem consumers are facing not only in Spain but in other EU countries.”Unsurprisingly, the fines have sparked a strong backlash from the airline industry. Ryanair’s O’Leary defended his company’s business practices, arguing that the fees in question help keep fares low. "Ryanair has for many years used bag fees and airport check-in fees to change passenger behaviour, and we pass on these cost savings in the form of lower fares to consumers,” he said.The Spanish Airline Association (ALA) echoed these sentiments, describing the fines as nonsensical and detrimental to the free market. Industry insiders argue that removing the ability to charge for extras could force budget carriers to raise their base fares, potentially undoing decades of progress in making air travel accessible to the masses.In the US, a similar debate is being heard. From 2018-2023, five US airlines made more than $12bn on seat selection fees alone, an "unbundled” cost that used to be included as part of an airline ticket. This week, a report, from the Senate Permanent Subcommittee on Investigations, said that in 2023, United Airlines charged as much as $319 for an extra legroom seat, Spirit Airlines charged as much as $299, Delta Air Lines charged as much as $264, Frontier Airlines charged $141 and American Airlines charged as much as $140."Seat fees have grown more expensive and farther-reaching,” it said. "These five airlines charge passengers extra for additional legroom, aisle and window seats, or even selecting a seat in advance, compelling parents with minor children to pay to sit together.”The 55-page report comes as the outgoing Biden Administration takes a victory lap for its crackdown on airlines by ramping up consumer protections. Earlier this month, the Department of Transportation announced it would begin enforcing a new rule that requires airlines to provide automatic refunds to passengers for cancelled or significantly delayed flights.The report detailed measures some airlines took to ensure passengers pay for carry-on bags. It stated that ultra-low-cost carriers Frontier and Spirit shelled out $26mn in incentives to spur agents in 2022 and 2023 "to catch passengers allegedly not following airline bag policies, often forcing those passengers to pay a bag fee or miss their flight.”"Frontier personnel can earn as much as $10 for each bag a passenger is forced to check at the gate,” the report said. "One Frontier official told the Subcommittee that bag policy enforcement was necessary because the airline does not want customers to be taking more or ‘stealing’ from the airline.”Frontier acknowledged the practice in a statement to CNN. "The commission for gate agents is simply designed to incentivise our team members to ensure compliance with bag size requirements so that all customers are treated equally and fairly, including the majority who comply with the rules,” the statement said.The Senate Permanent Subcommittee on Investigations says it will hold a hearing with officials from American, Delta, United, Frontier and Spirit next week.The author is an aviation analyst. X handle @AlexInAir.