EU says Spain's airline fines over cabin bag fees breach regulations

BRUSSELS (Reuters) -The European Commission on Wednesday said fines imposed by Spain on Ireland's Ryanair and other budget airlines for charging extra fees on cabin bags breached existing regulations.

The Spanish Consumer Rights Ministry last year fined Ryanair, easyJet, Norwegian, IAG's low-cost unit Vueling and Volotea a combined 179 million euros ($208.16 million) for practices such as charging for cabin luggage.

Such fines are a challenge to budget airlines' business model, which hinges on very low ticket prices while charging for extras like larger hand luggage that were traditionally included in the price.

But the commission said the fines were in breach of the EU law on air services, which provides airlines "freedom to set their prices."

"The Commission is therefore sending a letter of formal notice to Spain, which now has two months to respond and address the shortcomings," it said.

With this letter, the European Commission opened a so-called infringement procedure which could ultimately take the case to the EU's Court of Justice.

Pablo Bustinduy, Spanish Consumer Rights Minister, accused the Commission of siding with airlines against consumers.

"It is regrettable that the European Commission has decided to openly position itself as the defence attorney for this handful of large multinationals that are profiting at the expense of consumer rights," he told reporters.

"We will go to the EU tribunal and we will defend with all rigor our position."

A Spanish court in June ordered a temporary halt to the fines while it got to the bottom of the issue.

The court injunction allowed airlines to maintain their pricing policy until a final decision was reached.

($1 = 0.8599 euros)

(Reporting by Inti Landauro, editing by Bart Meijer)