Facing fines ... Jetstar and Virgin Australia face hefty fines for drip pricing. Picture: John Grainger/News Corp Australia
JETSTAR and Virgin Australia face hefty fines after being found guilty by the Federal Court of misleading passengers by charging sneaky fees on top of fare prices.
The Australian Competition and Consumer Commission had accused the airlines of “drip pricing” or failing to adequately disclose additional booking and service fees on their web and mobile sites.
In the case of Jetstar, passengers were slugged with an $8.50 credit card fee when they went to pay for their fare at the end of a lengthy booking process, and Virgin Australia charged passengers $7.70 for credit or debit card payments.
Taking off ... Jetstar insists it’s transparent about additional fees and charges on airfare bookings. Picture: Supplied.Source:Flickr
The Federal Court found Jetstar had not informed passengers of the fee upfront on its website in 2013 and on its mobile site in 2014, in what amounted to misleading and deceptive conduct.
Virgin Australia was found to have done the same on its mobile site in 2014 but was sufficiently transparent in other instances.
A hearing will be held next month to decide on an appropriate penalty for the airlines who still impose the charges but now tell passengers early in the booking process.
Breaches of Australian Consumer Law by corporations are punishable with fines of up to $1.1 million.
In December 2012, AirAsia was ordered by the Federal Court to pay $200,000 for failing to display on its website the full price of airfares.
ACCC Chairman Rod Sims said the findings of the Federal Court in the Jetstar and Virgin Austraalia matter were significant.
Costly ... Failing to be upfront about booking fees on its mobile site could cost Virgin Australia a lot of money. Picture: John Grainger/News Corp AustraliaSource:News Corp Australia
“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,” Mr Sims said.
“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.”
A Jetstar spokesman said they welcomed the Federal Court’s ruling that their current disclosure of the booking and service fee on the website was both adequate and complied with the law.
“We want our customers to clearly understand all fees and charges associated with their
booking and that’s why we have progressively made changes to make it clearer at every step
of the booking process what charges may apply,” he said.
Tom Godfrey from consumer advocacy group Choice said the ruling would come as a “double blow” to the airlines on the back of the Federal Government decision to enforce a ban on excessive credit card surcharges.
“It seems the tap is finally being turned off on the dodgy mobile fees and charges that have plagued consumers at the check-out,” said Mr Godfrey.
“For too long Australians purchasing flights have faced dodgy pricing tactics.”
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