How do you feel about Ryanair's "cheap flights" pricing strategy?
Do you enjoy the thrill of dodging extra fees and charges in order to get a bargain no-frills flight?
Or, like us, do you find it ridiculous that they insist on keeping the hardest-to-avoid charges up their sleeve until the checkout?
Since 1st January, the loophole for avoiding significant last-minute transaction charges on Ryanair flights got even tighter. You now have to resort to a little-used payment method if you don't want to add an extra £5 to the cost of each leg of the journey.
What's the most annoying thing about these extras? That they're hard to avoid? That you don't become aware of them until the last minute? Is it because they're mostly pure profit for the airline (see below)? Or is it that you don't even get an identifiable 'frill' in return?
The latest Ryanair transaction charge policy
The Irish budget airline offers flights through its website, and when it comes to paying for the flights online, most customers are charged £5 per person per flight as an 'administration fee' — purportedly to cover the costs of processing debit and credit card transactions. The law allows airlines to advertise cheap fares and apply these charges as 'extras' only if they offer at least one free payment method.
Now, Ryanair's latest change to its transaction fee rules is to phase out Visa Electron as a free payment method. The only remaining way to avoid Ryanair transaction fees now is to use a prepaid Mastercard.
Ryanair justifies the addition of charges since they are technically "optional". However, since very few UK consumers own a prepaid Mastercard, they know that this means that even more passengers will be charged the extra £5 (each way, each passenger) purely for the privilege of paying for the ticket they want to book!
Just to make that clear: if you're not paying by prepaid Mastercard (average cost: £7), you'll be charged another £10 on top of each return flight when it comes to the checkout.
Why we think Ryanair's administration fees are ridiculous…
The timing
First, there's the timing. These charges are not added until the last minute, after you've added all your passenger and luggage details, and long after you've decided the fares seem to represent good value.
The booking process actually presents you with 'Total cost of flight' at one point, then later a 'Total Payment Amount' (with 'excluding handling fee' underneath) before you select your payment method and notice the amount suddenly go up.
By that point in the sale, your only choices are to abandon the booking or suck up your objections and go ahead. Even if you want to get a prepaid Mastercard, that takes time you haven't got when air fares are changing daily. People fear losing out on the cheap initial fares and Ryanair knows it... so they go ahead and swallow the surcharge.
It's profiteering in disguise
Sure, there are some processing costs to be covered: credit card providers typically charge retailers 1.5%-2.5% of the total bill being settled. Most airlines now pass these costs on separately to their customers in some way.
However, debit card charges amount to pennies, which is why Virgin and British Airways allow these payments for free. And since the payments are highly automated and carried out online, there is negligible staff time involved at Ryanair's end.
So what does it actually cost to process the typical Ryanair transaction? Somewhere between 30p and £3. The rest of the 'administration fee' consists of a fat profit margin for the airline. And that's if you're only charged it once…
You can be charged several times for a single transaction
That's right, the administration fee is not actually a transaction charge, but a surcharge on each individual leg of the flight.
So if you are booking return flights for a family of four, and are paying by debit card (estimated processing cost: under £1), you will be charged £40 on top of the price you thought you were paying - despite the fact that it's a single transaction.
You don't even get a service
Taking your money for goods and services is hardly a service in its own right. Again, Ryanair knows this, but it pretends that processing your payment is some favour that it is doing you, in return for using its wonderful website.
Prepaid Mastercard options
Clearly the only winners are people who intend to book with Ryanair frequently and are willing to buy a prepaid Mastercard in order to do so.
So there is a silver lining to this cloud. Prepaid Mastercards can be useful for other reasons too: they don't require a credit check and can allow you to shop online if you can't or don't want to carry a credit card.
Virgin Money provide a Prepaid Mastercard, as do CaxtonFX and Tuxedo.
A mockery of the no-frills principle
We should point out one thing: we're not against low-cost airlines here. Far from it.
Money Hospital is all about paying less where you can, and avoiding poor value for money. No-frills airlines offer a great alternative to full service air travel, because they separate out the services you might not want to pay for. Luggage, food and check-in costs all come into this category.
However: payment is hardly a 'frill'. By treating it as such, Ryanair is mocking its own customers.
Ryanair's press office and even its Chief Executive Michael O'Leary like to respond to criticism by painting a 'them and us' picture. Its chief spokesman Stephen MacNamara described Ryanair as being "for the everyday Joe Bloggs" who "prefer Ryanair's model as it allows them to avoid costs".
However, our advice to "the everyday Joe Bloggs" is as follows: realise that Ryanair doesn't just pass on costs to you, it substantially profits from you paying for your flight.
And once you realise that its fares will bump up by £10 per return flight when you're at the till, you might find that a traditional full-service airline still offers better value for money on a similar (perhaps more convenient) route.
Final suggestion?
If you're planning to fly anywhere soon, don't just low-fare it — compare it!