Ryanair has been slapped with a massive €255 million (US $300 million) fine by Italian competition regulators over what they have described as the low-cost carrier’s “abusive strategy” towards travel agencies in Italy.
Perhaps completely unsurprisingly, Ryanair has slammed the decision, saying the competition watchdog is seeking to illegally overturn a previous court ruling by a Milan court, which concluded that the airline’s treatment of travel agents benefited travelers.
Italian regulators hit Ryanair with massive fine
On Tuesday, Italy’s competition watchdog – the Autorità Garante della Concorrenza
e del Mercato (AGCM) – concluded a more than year-long investigation into Ryanair’s treatment of both physical and online travel agencies.
The AGCM was concerned that with Ryanair having such a dominant position in Italy, any action it took to stop travel agencies from accessing its fares could reduce the choice offered to travelers.
“Ryanair’s conduct could and did, in fact, hinder travel agencies’ sales and affect OTAs’ [online travel agencies] ability to attract internet traffic,” the AGCM ruled on Tuesday.
“The company’s conduct ultimately prevented agencies from purchasing Ryanair flights in combination with flights operated by other carriers and/or additional tourism services,” the announcement continued.
“This weakened competition from agencies, both directly and indirectly, and in turn reduced the quality and range of tourism services available to consumers.”
How did Ryanair ‘abuse’ its position?
Several years ago, Ryanair waged a war on online travel agents, which it accused of ‘screen scraping’ its website to sell flights to travelers that were then marked up with additional fees and charges.
The situation escalated to the point that Ryanair started to take these online travel agents to court and managed to win injunctions to prevent some of these sites from displaying Ryanair flights.
Last year, however, Ryanair started to soften its stance and began reaching agreements with a growing list of online travel agencies, including one that it once described as the “no.1 pirate” for “scams and overcharges.”
In exchange for promises not to bolt on additional fees and charges, online travel agencies were given full access to Ryanair’s inventory to display and sell on their websites.
Agencies that didn’t want to sign an agreement with Ryanair, however, were blocked from gathering data from the airline’s booking systems, while, simultaneously, Ryanair launched a high-profile marketing campaign against the so-called ‘pirate’ companies.
Ryanair has a very different take on online travel agencies
Ryanair’s take on this situation is that online travel agencies had been overcharging consumers for years by inflating ancillary fees, pocketing the difference for themselves.
For example, Ryanair claimed that eDreams was overcharging consumers €25 for an €8 reserved seat and doubling the price of a 10kg bag allowance from €19.79 to €39.42.
In order to avoid being overcharged, Ryanair urged passengers to book directly through its own website. At the same time, Ryanair tried to stop online travel agencies from accessing its data by using ‘screen scraping’ technology.
Several online travel agencies attempted to sue Ryanair in an Italian court for restricting access to its fares, arguing that the carrier was abusing its dominant position, but the Milan Court of Appeal dismissed the case, ruling that Ryanair’s direct sales policy was “reasonable” and had resulted in lower fares for Italian consumers.
Ryanair promises to appeal fine
Given that a Milan court has already ruled that Ryanair was well within its rights to restrict access to its website by online travel agencies, the airline said on Tuesday that it was confident the AGCM’s fine would be overturned on appeal.
“This contorted ruling and its absurd fine flies in the face of the Milan Court decision of Jan 2024, and can only be the product of a biased and unsound analysis of Ryanair’s pro-consumer pricing in every market in Italy in which Ryanair operates,” the airline blasted after the fine was announced.
Michael O’Leary, Ryanair’s chief executive, added: “Ryanair looks forward to successfully overturning this legally flawed ruling and its absurd €256m fine in the Courts.”
“Today’s Ruling shows that the AGCM cannot be trusted to protect consumers, or uphold competition law, when it can be so easily misled by a tiny number of self-serving bricks & mortar travel agents and a Spanish OTA, making false claims.”
Bottom line
Frustrated with online travel agencies’ inflating ancillary fees, Ryanair took action to stop them from accessing its fares. Some of these agencies fought back, but last year, a Milan court ruled that Ryanair’s actions had been legal.
Now, an Italian watchdog has come to a very different conclusion, ruling that Ryanair’s actions harmed consumers. Ryanair intends to appeal the ruling.
