Jetstar and Virgin have been fined by the Federal Court for engaging in "false or misleading" practices.
The penalties – $545,000 for Jetstar and $200,000 for Virgin – are a response to the use of 'drip pricing', where the advertised price at the beginning of a purchase has unavoidable fees and charges added to it throughout the checkout process.
Jetstar's customers were hit with a booking fee of $8.50 on its website in 2013 and its mobile site in 2014, while Virgin's customers paid a $7.70 'service charge' on purchases made on its mobile site in 2014.
These charges were not included in the upfront ticket prices.
The maximum penalty for making false or misleading representations under Australian Consumer Law is $1.1 million.
The penalties handed down to Jetstar and Virgin, which follow an earlier ruling by the Federal Court, will act as a deterrent, says Rod Sims, chairman of the Australian Competitions and Consumer Commission (ACCC).
"The ACCC was concerned that Jetstar and Virgin's 'drip pricing' conduct drew consumers into an online purchase process with a headline price, but failed to provide adequate disclosure of additional fees and charges that are likely to apply.
"As a result of the ACCC's enforcement and compliance actions, businesses across several industries...have now improved their online booking practices."
Jetstar issued a statement accepting the court's decision. "We made changes to our web and mobile sites to make the options available and fees that apply even clearer."
A statement issued by Virgin says the decision is "consistent with the airline and the ACCC's joint submission on penalties".
"Since the matter was heard, the RBA introduced changes to the regulation of credit card surcharges and Virgin Australia's card payment fees were updated in accordance with these changes."
Last month the ACCC announced it will be closely monitoring the airline industry as a matter of priority. This follows a super complaint lodged by CHOICE to the ACCC addressing consumer refund rights, excessive fees, unfair terms and poor complaints handling processes.