VIRGIN AND JETSTAR IN HOT WATER
Written on the 17 November 2015
TWO of the country's biggest airlines have found themselves in hot water following a decision handed down by the Federal Court that both companies engaged in misleading and deceptive conduct.
Jetstar Airways and Virgin Australia have been found to have contravened the Australian Consumer Law by making false or misleading representations about the price of particular advertised airfares.
Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims says both Jetstar and Virgin engaged in conduct which is often referred to as 'drip pricing,' providing grounds for the company watchdog to take legal action.
"Drip pricing is where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges are then incrementally disclosed," says Sims.
"This can result in consumers paying a higher price than the advertised price, spending more than they realise and making it more difficult to compare offers."
The ACCC alleged in the cases that both Jetstar and Virgin failed to adequately disclose an additional booking service fee of $8.50 and $7.70 respectively, only disclosing this additional cost to consumers once they had moved through several stages of the process.
In relation to Jetstar, the Court found that representations about specific advertised airfares made on its website in 2013, and its mobile site in 2014, were false or misleading.
In relation to Virgin, the Court found that representations made on its mobile site in 2014 about specific advertised airfares were false or misleading.
"The ACCC's concern with drip pricing has always been to ensure that consumers are not misled and that businesses are not unfairly disadvantaged by misleading practices," says Sims.
"While the Court found that the ACCC had not established all of the allegations against Jetstar and Virgin, the findings that some of their conduct was misleading are significant.
"Separately I note that it is encouraging that a number of businesses in the travel, accommodation and ticketing industries have adjusted their online pricing practices to improve disclosure of fees and charges since the ACCC began its work on drip pricing. This also has a positive effect on competition, allowing consumers to easily compare and choose the best price."
Drip pricing conduct was a priority enforcement area in the ACCC's 2014 Compliance and Enforcement Policy with the ACCC addressing identified behaviour across a number of industries. It remains a focus for the ACCC, as part of the ACCC's current priority area of systemic consumer issues in the online marketplace.