Ryanair Holdings PLC (LSE:RYA) is facing an investigation in Italy over suspicions the low-cost Irish carrier has been abusing its dominant position in the country’s travel sector.
“In [our] preliminary view, Ryanair is leveraging on its dominant position in several markets of air transport sector in order to extend its market power,” the Italian Competition Authority said on Wednesday.
According to the regulator, Ryanair has sought to restrict travel agencies’ ability to sell tickets for its flights.
This is done by preventing travel agencies from purchasing tickets through its website, limiting their ability to sell travel alongside accommodation, the regulator said.
“Ryanair's conduct seeks to restrict travel agencies from selling airline tickets, which is typically the initial step in planning a holiday and a crucial entry point for selling additional services,” the authority added.
“As such, it could have adverse consequences on both travel agencies and end-consumers.”
Given Ryanair also offers customers deals on hotels, as well as car rental services, the regulator argued the practice of limiting tickets for others to sell was a bid to extend its power.
Alongside easyJet PLC and Wizz Air Holdings PLC (AIM:WIZZ), Ryanair is already under scrutiny by Italian authorities over alleged price-fixing on flights to and from neighbouring Sicily.
Lower-cost airlines make much of their revenue from selling additional services such as priority boarding and extra baggage space, but also accommodation and airport transport.
These add-ons, known as ancillary fees, generated a total of €1.18 billion for the Irish carrier during the first quarter—up 15%— of total revenue worth €3.65 billion.
Low-cost rival easyJet marked a 28% increase in ancillary revenue in its latest quarterly results meanwhile, to £622 million, as passenger revenue climbed to £1.5 billion.
Per average passenger, Ryanair made €23.30 (£20.08) in ancillary revenue in the three months to June, while easyJet gained £23.75.
Some nations have moved to crack down on such sales, however, since passengers often end up paying far more than the price of their originally advertised ticket.
Spain has already threatened fines pending an investigation. In the UK, such additional costs across different sectors are set to be the subject of a government consultation.