Australian Airlines Fined Three Quarters of A Million Dollars for Drip Pricing
Friday 10 March 2017 @ 12.22 p.m. | Trade & Commerce
Australia’s two biggest competing airlines, Jetstar and Virgin Australia, have been handed a fine of $545,000 and $200,000 respectively for misleading ‘drip pricing’ practices. The Australian Competition and Consumer Commission (ACCC) took action against the airlines in 2014 when it was alleged that the airlines had engaged in misleading conduct by not disclosing hidden charges on top of advertised prices on their mobile websites.
Drip Pricing
The Federal Court of Australia ruled against the airlines in 2015 finding that they had engaged in misleading and deceptive drip pricing practices. Drip pricing is where a price advertised online is increased incrementally throughout the purchase process via undisclosed fees or charges. The two airlines’ mobile websites were found to have engaged in this process between 2013 and 2014. The ACCC alleged that Jetstar would charge customers an additional $8.50 booking fee where a PayPal account or a credit card was used to finalise purchases. Virgin Australia also issued a $7.70 booking fee for similar circumstances.
Court Ruling
The Federal Court ruled that both airlines contravened section 18 and 19 of the Australian Consumer Law because there was not an explicit disclosure of the existence of the booking fee readily apparent on the consumer website. Rather, the consumer would be required to undertake a “series of relatively annoying steps…to ascertain the existence of the book and service fee.”
The decision was finalised in 2015 but Jetstar has since pushed back against a suggested fine of $550,000. However, the Court has now come to its final decision of fining Jetstar a sum of $545,000 while Virgin Australia received a $200,000 fine.
ACCC chairman Rod Sims said:
“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.”
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