The Australian Competition and Consumer Commission has commenced proceedings in the Federal Court against Jetstar and Virgin Australia, alleging that each airline has engaged in misleading or deceptive conduct and made false or misleading representations when quoting airfares.
The ACCC alleges both airlines have engaged in what is often referred to as ‘drip pricing’, where a headline price is advertised at the beginning of an online fare process, and additional fees and charges such as travel insurance, checked luggage, meals, service fees, and credit card surcharges are incrementally added, often by way of a default selection.
The ACCC says this can result in consumers paying a higher price than the advertised price or spending more than they realise, that the fees are applied to the substantial majority of online bookings, and instead should be disclosed upfront and prominently with or within headline prices.
“The ACCC is concerned about advertising that draws consumers into an online purchase process but fails to provide sufficient upfront disclosure of additional fees and charges that are likely to apply,” ACCC Chairman Rod Sims said in a statement. “Drip pricing practices, such as those alleged by the ACCC in these proceedings, have the potential to cause both competition and consumer detriment. Not only can this practice lead to consumers potentially being misled, it may also make it difficult for businesses with more transparent pricing practices to compete on a level playing field. The ACCC continues to investigate businesses in other industries in relation to their practices of incremental disclosure of fees and charges.”