Spain has fined five budget airlines, including Ryanair a record fine of EUR 179 million for charging passengers for hand luggage and seat reservations. In an order passed on Friday, the Ministry of Social Rights and Consumer Affairs upheld the earlier order that had been challenged by the airlines.

In its order on Friday, the ministry also said it was banning some of the practices for which the airlines have been fined, including charging extra fees for taking hand luggage on flights and reserving adjacent seats for children or other dependents.

“These are practices that, unfortunately, millions of people know first-hand and that consumer associations have been complaining about for years,” Pablo Bustinduy, Minister of Social Rights and Consumer Affairs, told media.

“The minstry is sending a very clear message, that no company, no matter how big or powerful, is above the law. And that there cannot be business models that are based on the violation of consumer rights or abusive practices,” Bustinduy added.

The EUR 179 million fine is the biggest sanction issued by the Ministry of Social Rights and Consumer Affairs and followed a wide-ranging investigation into practices in the low-cost airline industry. The government investigation also looked at concerns around a lack of transparency by the airlines over the final price of services when booking online, and the decision to block cash payments at the airport for additional services.

Ryanair was handed the biggest fine of EUR 108 million, EasyJet has a fine of EUR 29m. There is a fine of EUR 39 million on Vueling, a low-cost airline of IAG, the company that also owns British Airways, while two other smaller carriers, Norwegian Airlines and Volotea, have been fined EUR 1.6 million and EUR 1.2 million each.

While the airlines and their associations have sharply criticised the decision, it has been welcomed by consumer organisations, notably Facua, that had been campaigning for six years for the government to intervene in the matter.

“The first fines in history to large companies responsible for massive fraud for very serious violations of consumer protection legislation. The first for real, because all those that have been applied in the last four decades have been nothing more than a joke. A bad joke on the consumers who are victims of these frauds,’’ said Facua in a statement.

“The fines we have just learned about against the airlines are, at last, real sanctions, proportional to the income obtained fraudulently. For these to occur, the Ministry of Consumer Affairs had to be given the authority to be able to apply fines. A historic demand by FACUA that was taken up by the previous minister, Alberto Garzón, by promoting a modification of the general law for the protection of consumers that, since 2022, gives the ministry the power to impose sanctions,’’ it added.

Airlines cry foul

The aviation lobby has come out strongly against the decision. The International Air Transport Association (IATA) says that the fine undermines freedom of pricing which is fundamental to consumer choice and competition.

“This is an appalling decision. Far from protecting the consumer interest, this is a slap in the face of travellers who want choice. Prohibiting all airlines from charging for cabin bags means that the cost will be automatically priced into all tickets. What’s next? Forcing all hotel guests to pay for breakfast? Or charging everyone to pay for the coat-check when they buy a concert ticket? EU Law protects pricing freedom for good reason. And airlines offer a range of service models from all-inclusive to basic transport. This move by the Spanish government is unlawful and must be stopped,” says Willie Walsh, Director General, IATA.

IATA says that the existence of different models, from full-service to ultra low cost, is a response to market demand and regulation is not needed in this area. Moreover, ancillary revenue is key for the LCC business model, which has reduced prices and widened access to air travel to lower-income groups.

“They failed once, and they will fail again. Consumers deserve better than this retrograde step which ignores the realities of today’s travellers. Spain’s tourism industry has grown to account for nearly 13 pc of the country’s GDP, with 80 pc of travellers arriving by air, and many of them budget conscious. Cheap air fares have played a huge role in growing this sector of the economy. The government has no competence, legal or practical, in eliminating the availability of basic airfares. The ECJ concluded this a decade ago. The EC needs to urgently step up and defend its laws which deliver benefits to consumers by protecting pricing freedom,” said Walsh.