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Sunday, June 23, 2024

Airlines struggle to charge for new tax

UPDATED: Both Norwegian Air and Ryanair warned this week that they planned to charge another 80 or 88 kroner to the credit cards customers had used to buy airline tickets before June 1, to cover the costs of the state’s new airline seat tax that took effect on June 1. “Not allowed,” ruled Norway’s Consumer Ombudsman, so now Norwegian Air, at least, is dropping the plan that has angered both passengers and travel agencies. Ryanair wouldn’t answer whether it intended to defy the ruling.

Norwegian Air has had to drop plans to charge customers' credit cards for the cost of the new airline seat tax. PHOTO:
Norwegian Air has had to drop plans to charge customers’ credit cards for the cost of the new airline seat tax. PHOTO:

Scandinavian Airlines (SAS) had earlier announced that it won’t attempt to charge passengers retroactively for the tax, which amounts to NOK 80 for flights to destinations outside Norway and NOK 88 for flights within Norway, because the latter is also subject to Norway’s 10 percent MVA (VAT).

Tour operators running charter flights, however, quickly sent separate invoices to their customers who’d paid in advance for trips after the tax took effect. Ryanair sent out a short press release this week indicating it will also seek to recover the costs of the tax from its passengers. For tickets purchased before June 1st, Ryanair said it will charge NOK 80 to the credit or debit card used to initially pay for the trip. For reservations made and tickets purchased after June 1, the fare will include the new tax of NOK 80.

According to the message that Norway’s Consumer Ombudsman (Forbrukerombudet) sent to Norwegian Air, Ryanair is not allowed to simply charge its customers’ cards again. Ryanair refused to answer questions Thursday night about whether it intends to defy the regulation.

Stiff resistance
Norwegian Air met stiff resistance to its similar attempt, not only from passengers and the ombudsman but also when it contacted travel agencies and asked them to bill customers for the tax. Newspaper Aftenposten reported that an organization representing travel agents, Virke, flatly refused to act as the airline’s collection bureau. “The travel agencies live off of good relations with their customers,” Virke director Sverre McSeveny-Årli told Aftenposten. “It’s not certain their goodwill would extend to being collection agents for Norwegian.”

It was Norwegian Air’s plan to retroactively charge customers’ credit and debit cards that stirred the most opposition, and now Ryanair is planning the same thing. Norwegian Broadcasting (NRK) reported on Thursday that the ombudsman felt compelled to remind Norwegian Air that customers must approve all charges to their credit or debit cards. Merchants are not allowed to impose charges retroactively without the cardholder’s permission.

After receiving a letter from the state ombudsman, Norwegian Air dropped its plans to automatically charge its passengers’ cards and now will opt for “other methods” of demanding passengers to pay for the tax. “We have tried to make the payment of this state tax as simple and efficient as possible for the customer, and I think most understand that the money will land in the state treasury and not with us,” Norwegian Air spokesman Lasse Sandaker Nielsen told NRK. “But we see there are various opinions on how the payment should be made. We will examine other possibilities for how customers can pay the tax, because the state wants its money regardless.”

‘Totally unacceptable’
Passenger Lars Hoff was among those objecting to Norwegian’s card-charging plan. He had bought and paid for tickets before June 1, and he was angry when he received a message from Norwegian Air that the airline was about to withdraw another NOK 80 from his account. “Norwegian is not allowed to do that,” Hoff told NRK, “so it was totally unacceptable.”

While SAS intends to absorb initial costs of the new tax itself, Norwegian, Ryanair and the charter airlines clearly remain keen to pass it on to their passengers. It remained unclear whether Ryanair will also be forced to back down from charging passengers’ credit cards without their approval. Berglund



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