(Bloomberg) -- Prime Minister Rishi Sunak indicated his UK government may crack down on so-called drip pricing used by companies including airlines, which charge extra for a succession of add-ons to an initial purchase.
Without specifying industries, Sunak told reporters on his trip to Washington his government is examining the issue to see “how widespread and how damaging it might be.” Drip pricing is when an airline, for example, charges an initial fare and then extra for luggage, seat choice and early boarding.
“This is a practice that we want to make sure that we’re across, looking at, to see how harmful it is and if we need to take further action,” Sunak said.
Sunak’s comments come as he struggles to show progress on a key pledge to tame inflation, which is still at 8.7% and only dipped below 10% in April after 7 months in double digits. Ministers are “concerned” about drip pricing and want to ensure “that we keep helping people with the cost of living,” he said.
The pricing model has become increasingly important for airlines including Ryanair Holdings Plc, EasyJet Plc and even more traditional carriers like British Airways. EasyJet Chief Executive Officer Johan Lundgren said last month that the budget carrier is squeezing more revenue out of passengers by charging for extras.
While airlines are the most obvious examples, with the add-ons a necessary part of a passenger’s travel, the practice is also used more widely in the travel industry with add-ons to package holidays and hotel bookings including late check-out and early check-in and options to take out insurance and hire a car.
“Drip pricing is an underhanded way of squeezing extra cash out of consumers and is particularly concerning during a cost of living crisis, when it’s more important than ever for shoppers to be able to stick to a budget,” Rocio Concha, director of policy at consumer group Which?, said in a statement, calling it a “big problem” with airline bookings, but also pointing to other industries.
“Drip pricing happens in a variety of sectors, from train bookings to food delivery apps and concert tickets,” Concha said. “Fees can be added late into the buying process, making it more likely that consumers will accept them and harder to compare prices.”
--With assistance from Anthony Palazzo.
©2023 Bloomberg L.P.
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