01.Airlines in trouble for drip pricing
Jetstar and Virgin will face the federal court on charges of engaging in misleading or deceptive conduct and making false or misleading representations relating to allegations of drip pricing made by the Australian Competition and Consumer Commission (ACCC).
The ACCC’s allegations relate to the airlines’ practice of advertising a headline rate for a flight at the beginning of an online booking process, then disclosing fees and charges (which may be unavoidable for consumers) as a consumer gets further into their purchase. This can result in consumers paying a higher price than the advertised price or spending more than they intended. Under the Australian Consumer Law, you're entitled to see the total price, inclusive of any additional fees, charges or taxes.
The practice of drip pricing by the airlines was recently highlighted by CHOICE.
The ACCC alleges that Jetstar and Virgin each advertised domestic airfares at certain prices only available if payment was made using particular methods. Specifically, the ACCC has taken issue with the airlines’ failure to disclose additional booking and service fees. It found that:
- Jetstar charged a booking and service fee of $8.50 per passenger, per domestic flight if payment was made by a credit card (other than a Jetstar branded credit card) or PayPal; and
- Virgin charged a booking and service fee of $7.70 per passenger, per booking if payment was made by a credit or debit card or PayPal.
“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 says.
“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,” Sims says. “The ACCC continues to investigate businesses in other industries in relation to their practices of incremental disclosure of fees and charges.”
The federal court will be hearing the case in August this year.
Top tips to avoid drip pricing
The ACCC suggests consumers can follow these tips to avoid paying more than initially expected:
- Be aware of misleading drip pricing practices when shopping online for services in the airline, ticketing, accommodation and vehicle rental sectors.
- Shop around and be aware that you may need to pay more than what was advertised. Add all the charges together. The cheapest advertised price may not be the cheapest final price.
- Be prepared to back out of the transaction, especially when you start to encounter additional charges.
- Look out for pre-selections and make sure you deselect anything you do not want to purchase. Thoroughly check your booking before you make any final payments.