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Business

Ruling Forces Transparency on Budget Airlines

A German court demands that budget airlines must now offer 10 percent of all flights at advertised discount rates and provide detailed advertising after ruling that Hapag Lloyd Express ads misled customers.

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It may cost the same as a taxi ride to fly HLX, but a court says it isn't offering enough seats at cab rates to its passengers.

It was always something that sounded too good to be true. Just imagine, flights from Germany to European destinations ranging from Paris to Venice for only €19.99 ($22.43), courtesy of the public’s latest best friend – the budget airline. Travel to the city of your choice for less than the price of a taxi fare, the adverts implied.

Too bad, then, that when potential customers went online to book these bargains, very few snapped up the bargains they were looking for. Surely it must have been that all the others who had seen the ads had reacted faster or that maybe the offer period had expired. Better luck next time.

The reason many people missed out is because, despite these deals being genuine, no mention was made in the advertising of how many seats would be made available at the rock-bottom prices. In the case of travel giant TUI’s Hapag Lloyd Express (HLX) subsidiary, many consumer groups felt that the advertising of certain HLX offers failed to adequately inform the public.

On Tuesday, a Hanover regional court ruled in favor of the plaintiff in a civil suit brought on by the Federal Association for Consumer Protection, which had accused HLX of running a misleading ad campaign. The presiding judge in the case, Ullrich Kleybolte, ordered that budget carriers must offer every tenth seat at the advertised discount rate if they want to continue marketing themselves as "budget carriers." Future advertisements must also disclose in detail the number of cheap seats available on each flight – the main cause of the dispute between HLX and consumer protection groups.

The ruling may well turn out to be a yardstick in cases involving disputes over aggressive advertising, especially those employed in the cutthroat budget airline industry, where competition is fierce.

HLX claims capacity met levels

HLX’s advertising campaign for flights between Berlin and Cologne between Jan. 22 and March 4 this year first attracted criticism. But during the civil proceedings, Ulrich Haupt, the lawyer representing HLX, defended the company by saying that of the total 384 flights made during that time on that specific route, over ten percent of capacity was allocated the cheapest seat price of €19.99. He added that through later sales, the share of cheap places rose to 22.5 percent of capacity.

However, the issue at the center of the case was the advertising accompanying the offer, not the amount of seating available at the cheapest price. Judge Kleybolte issued a stark warning to other budget carriers, saying: "Should the information concerning a capacity of cheap seats (that total) less that 10 percent (of an airplane’s seats) be missing from future advertising, then it will be treated as a misleading advertisement and deemed a ‘decoy offer’."

Consumer groups rejoice

Lawyers for consumers groups’ originally sought only to force budget airlines to mention the percentage of available cheap seats in their future ad campaigns, but the ruling handed down by the court went even further, ordering airline’s to allocate at least 10 percent of seats for the advertised fare.

"We demand more transparency and a detailed explanation for the consumer," said Jürgen Hennig, attorney for the consumers’ groups.

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