Airlines continue to engage in misleading price advertising. (See my paper at the 17th IFTTA Conference 2005, available at
http://www.iftta.org/web/2005AirAdEUIrsh.html). Among other things and according to the website of the Advertising Standards Authority of Ireland (
http://www.asai.ie/) airlines continue to be in breach of the advertising industry’s own code of advertising by - claiming that emails sent to consumer subscribers who have indicated they wish to receive special offers etc are not subject to the Code (Ref AC/0605/0505; AC/0502/0122) - claiming that the term ‘Free’ can be used although the consumer still has to pay taxes, charges (AC/0512/1384) - claiming that taxes, charges etc. do not have to be included in the advertised air fare (Ref GM/0602/0219). (References traceable through
http://www.asai.ie/)
Perhaps the most significant recent development concerns the attempt by the advertising industry self-regulator to bring clarity to the vexed question of how many seats an airline should make available when it advertises a low fare. Rule 2.44 of the Irish Code in insists in effect that the supply must be in reasonable proportion to the demand. This is a vague rule and heretofore airlines have been left free to interpret it themselves.
In a recent case (AC/0504/0310) an airline sought advice in advance from the self regulator on this point and was told such advice was not given. When the airline then provided only 4% of its seats at the advertised low fare complaints were made that the advertisement was misleading. The self regulator rejected the complaint apparently because the airline had tried to seek guidance. But more importantly the self regulator also stated: ‘Going forward and in order to provide clarity for advertisers, the Committee considered that at least 10% of tickets should be available at the lead in price.’ The choice of 10% is not explained. At first glance it is difficult to see how anyone could say that 10% is a reasonable figure. One might have thought of a figure of at least 50% if not higher.
However, the self regulator presumably chose the figure of 10% to reflect the interests of all parties, including airlines and the fact that consumers can be expected to realise an airline could not be expected to sell a lot of its seats at low fares.
From a purely legal point of view, whether 4% or 10% or some other figure complies with the present or future law banning misleading price advertising depends on European Community law and how the criterion of meaning (the average person) interprets the advertisement.
The recent EC Directive 2005/29 on unfair commercial practices (to be implemented by end-2007) contains an equivalent requirement that airlines provide seats in reasonable proportion to an advertisement of low air fares. Point 5 of the blacklist in the Annex includes among practises to be banned: ‘Making an invitation to purchase products at a specified price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply … those products … at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product and the price offered (bait advertising).’
This Directive also makes clear that the criterion of meaning is the careful reader of advertisements, not the hasty one. One can therefore expect a judge to say a careful reader will be aware that airlines cannot commercially operate flights if all seats are sold at the advertised low fare and that consumers surely understand this. But the judge may equally consider that consumers also know low fares do not prevent airlines from making a profit.
Given that airlines now have the technology to change fares very quickly and increase the fares if they wish, it may be that the figure of 10% is much too low.
(Originally posted by Marc Mc Donald)
