“For the sake of the environment” the Austrian government wants to introduce minimum prices for flight tickets. But the plans don't seem to be fully fused yet. A comment from a current occasion.

The events on Monday are reshuffling the cards at the aviation location Austria: The Ryanair subsidiary Lauda will keep its base in Vienna open, albeit on a smaller scale. Instead of 16 Airbus A320s, ten planes will be used from August. The Republic of Austria will support Austrian Airlines financially. The government announced a multi-million dollar rescue package that is being lifted in cooperation with Lufthansa and Austrian banks.

The adjustment of the ticket tax to a uniform 2021 euros, which is actually planned for the year 12, is now being brought forward, but this should not really cause changes in the market. It is more likely that the anti-dumping regulation proposed by the government could change the market. In the future, there should be no more tickets for less than 40 euros. Specifically, the government said that tickets can no longer be sold below the price of taxes and fees as well as the ticket tax. This has an impact on low-cost offers, especially from Wizzair and Lauda, ​​which have often sold tickets from 9,99 euros.

If the government's plans can be implemented as presented, the cheapest ticket would cost 40 euros one-way in the future. However, it appears questionable to what extent such an anti-dumping regulation can be enforced within the European Union. It is a gross encroachment on entrepreneurial freedom of pricing. It would therefore not be surprising if one or the other provider would take the new law, which has not yet been passed in the National Council, to court.

Low-cost airlines could invoke foreign legal situations

Austria sees itself as a pioneer in matters of environmental protection and the avoidance of price dumping in the area of ​​flight tickets, but it is actually extremely questionable whether the foreign low-cost airlines in particular will also comply with this law. It seems piquant that Lauda tickets are issued by Ryanair DAC in Ireland and that the Irish carrier's general terms and conditions contain the passage that applies exclusively to Irish law. The situation is very similar with Wizzair, which states in its General Conditions of Carriage that Hungarian law applies. In the past, the Hungarian carrier has repeatedly stated that it would only be subject to the laws of Hungary because it has a Hungarian AOC and is supervised by the Hungarian aviation authority. As a further consequence, this could well mean that Wizzair and Ryanair could continue to offer tickets for 9,99 euros and literally talk themselves out of the legislation of the EU states Ireland and Hungary. That would then reduce the planned anti-dumping regulation of the Austrian federal government to absurdity. 

Also, it cannot be ruled out that the airlines mentioned, which are well known for their aggressive business practices, simply disregard the regulation and accept penalties. This would give you a competitive advantage and if the penalties that would have to be levied by the Republic of Austria are not in a deterrent amount, you would actually take them into account and thus “accept” them. 

Airports close to the border could benefit

On the legal side, of course, the question arises whether the planned anti-dumping regulation could not cause massive damage to Austria as a location for aviation. The reason for this is that the airports in the neighboring countries, especially Slovakia, the Czech Republic, Slovenia, Germany and Hungary, do not have any such regulations. It is quite possible that even Maribor Airport could become more or less a “cheap alternative” for Graz Airport. A concrete but fictitious example: If an airline offers a route from Graz to Frankfurt am Main, for example, the ticket must cost at least 40 euros. However, if you are flying from Maribor, this minimum price regulation does not apply, and with skilful negotiations there are also discounts for newcomer airlines on top of that. 

This could therefore lead to a shift in the flight offer from Austria to other countries. Klagenfurt Airport in particular could have a particularly difficult time, as it is already in fierce competition with the Slovenian capital city airport Ljubljana. In Vienna, on the other hand, Bratislava could benefit, as there are cheap and high-frequency bus offers between the two capitals. In the cheapest case, a bus ride from downtown Vienna to Bratislava Airport costs just one euro. This low price could literally make up for the longer travel time. Ryanair is even able to dump against its own subsidiary Lauda from Bratislava, but also from Brno. Why? Because the government plans to charge at least 40 euros for a ticket in Austria, while in Bratislava Ryanair and Wizzair can literally give the ticket away. 

It is not yet known whether there are carriers that are planning to relocate, at least partially, their services to airports close to the border. In the past, however, it has been shown that if the offer abroad is attractively priced and travelers have, for example, been given free parking space for their car or a cheap or even free bus transfer, the market has accepted it. But if the flight ticket from Vienna is only slightly more expensive, the offer abroad is not really successful in terms of attracting customers in Austria. 

On the legal side, it is of course questionable how the Republic of Austria intends to implement such a solo effort under the guise of environmental protection at EU level. If minimum prices for flight tickets are levied across Europe, the same competitive conditions will prevail across the Union. However, as long as Austria goes it alone and thus enables the airports close to the border to have significantly cheaper offers for their airlines in stock, competition will be distorted. The question of whether or not one can sell airline tickets below the prices of taxes and fees as well as the ticket levy may or may not have to be clarified by the courts. 

From a social point of view, the practice that Austria now wants to introduce is also questionable, as the taxes, fees and ticket levy have to be paid by someone anyway. It doesn't matter whether the airline carefully breaks them down and bills them to the customer or calculates them in the ticket price or even pays them out of their own pocket or speculates that the passenger will purchase any additional services and finance them in this way. 

Coupon codes could really undermine the law

At the moment, the proposal of the Austrian federal government seems to be extremely half-baked or it still needs a final fine-tuning. What cannot be overlooked, however, is that an attempt is being made under the guise of environmental protection to stem the “low-cost price war”, which last year at Vienna Airport had assumed absurd proportions. Ultimately, it remains to be seen whether the plans will actually be converted into laws and then stand up to the courts. It cannot be ruled out that the European Court of Justice could ultimately overturn this law, which would by no means be news in Austria. 

The low-cost airlines, against which this regulation is explicitly directed, could incidentally also cheat completely apart from the appeal to a foreign legal situation. These could, for example, publish voucher codes that grant a discount of around 30 euros so that you can still buy 9,99 euros tickets. If you want to make this particularly absurd, you could automatically set a discount of 30 euros per one-way ticket in the booking system and justify this with a new campaign every day. The anti-dumping regulation planned by the Austrian government would be driven ad absurdum and consumers already know discount codes from online shopping. Stationary retail also uses such methods, both in the form of apps and traditionally on paper for cutting out of the advertising brochure.