Spanish court suspends fines for two airlines over cabin bag fees

MADRID (Reuters) -A Spanish court on Thursday ordered a temporary halt to a fine slapped by the government on two budget airlines, including Ryanair, for practices such as charging for larger cabin bags, which according to the consumer ministry violated customer rights.

The airlines have appealed the decision, and the court said it was impossible to get to the bottom of the issue at the moment, and paying the fine while it is being challenged in court would financially strain the companies.

The injunction order effectively maintains the airlines' policies until a final decision is reached, and represents a first victory for the airlines.

Ryanair and Norwegian Air logged the appeal after they were fined 109.6 million euros ($128.40 million) last year, saying they believe the fine has no basis.

Madrid's administrative court ordered both airlines to issue bank guarantees worth 111.8 million euros, equivalent to the sanctions plus interest, while the suspension is in place, it said in a statement.

Industry group ALA praised the court's decision and claimed that the fines have no basis. It argued the fines "limit customers' ability to choose, and distort (the European Union's) common market". It said airlines would continue their charging policy until a final ruling is issued.

Other airlines were also fined by Spain's consumer rights ministry last year. ALA said it hoped the court ruling will be later applied to all airlines.

The ministry imposed a combined sanction of 179 million euros to all the airlines, which also included IAG's low-cost unit Vueling, easyJet, and Volotea.

It argued they violated customers' rights when charging for larger carry-on bags, picking seats or boarding pass print-outs and not allowing cash payments at check-in desks or to buy items on board.

($1 = 0.8536 euros)

(Reporting by Joan Faus and Inti Landauro; Editing by Andrei Khalip and Aurora Ellis)