Court rules on drip pricing tactics by Jetstar and Virgin

17 November 2015 | Airlines failed to disclose booking and service fees on mobile sites.

Drip pricing on mobile sites

A federal court has handed down its ruling in a case lodged by the ACCC that alleged that Jetstar and Virgin Australia engaged in the illegal practice of drip pricing.

Drip pricing occurs when one price appears at the beginning of the online booking process and additional fees are added, or 'dripped', as the process continues. The result is that the customer ends up paying more than the advertised price.

The additional fees often include credit card surcharges, an area of ongoing interest for CHOICE.

The court ruled that both Jetstar and Virgin failed to disclose their booking and service fee adequately on their mobile sites until the very end of the booking process, therefore contravening sections 18(1) and 29(1) of the Australian Consumer Law (ACL). In addition, Jetstar was also found to have contravened sections 18 and 29(1) of the ACL on its website back in May 2013.

However, the court didn't find that Jetstar and Virgin's websites were in contravention of the ACL.

Not upfront about fees

When the ACCC lodged the case in June last year, Jetstar's fees were $8.50 per passenger and Virgin's $7.70 per passenger if the ticket was bought with a credit card or through 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 said at the time. 

"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 said.

The issue has been a priority area for the regulator.

The consequences for the airlines will be decided upon by the court at a later date. 

How to avoid drip pricing

The ACCC offers the following tips to avoid becoming a victim of drip pricing.

  • 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. Don't just focus on the advertised price – 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 preselections, where add-ons are preselected for you. Deselect anything you don't want to buy and thoroughly check your booking before you make any final payments.