Why Don't Politicians Understand Economics??????

We're sure that Langley Council will be happy to hear that they are not the only ones that don't understand economics.

An article from the German news service Deutche Welle says that the German Federal Court has told Ryanair that they are not permitted to charge customers a fee for using debit or credit cards when purchasing tickets in that country. Click here for the article.

It is, apparently, justifiable for banks to charge the airline if they accept debit or credit cards but not okay for the airline to pass those fees onto the traveller.

Every microeconomics textbook we have ever read suggests that price is determined by the marginal cost and the elasticity of demand. Bank fees are a marginal cost and we expect that those fees increase ticket prices.

So, the likely outcome? Ryanair will increase airfares by an amount equal to the surcharge that they were going to impliment (1.50-4.00 euros). That way they will satisfy the German court and paradoxically increase profits by charging passengers that don't pay with debit or credit cards.