Jetstar and Virgin Australia found to be ‘drip pricing’

The Federal Court has found that Jetstar and Virgin Australia contravened the Australian Consumer Law by engaging in misleading and deceptive conduct and making false or misleading representations about the price of particular advertised airfares, in proceedings brought against each of the airlines by the ACCC.

In relation to Jetstar, the Court found that representations about specific advertised airfares made on its website in 2013, and its mobile site in 2014, were false or misleading.  However, the Court held that the ACCC had not established that the alleged misleading representations were made by Jetstar on its 2014 website, nor in its promotional emails in 2014.

In relation to Virgin, the Court found that representations made on its mobile site in 2014 about specific advertised airfares were false or misleading. The Court held that the ACCC had not established that the alleged misleading representations were made by Virgin on its website, nor in its promotional emails of 2014.

ACCC Chairman Rod Sims said “The conduct which was the subject of the ACCC’s allegations in both of these proceedings is an example of what is often referred to as ‘drip pricing’. Drip pricing is where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges (which may be unavoidable or applied in most transactions) are then incrementally disclosed (or ‘dripped’). This can result in consumers paying a higher price than the advertised price, spending more than they realise and making it more difficult to compare offers.”

The ACCC alleged in these proceedings that, in relation to specific advertised airfares, Jetstar and Virgin failed to adequately disclose an additional Booking and Service Fee ($8.50 and $7.70 respectively) which was charged on bookings paid using most credit cards or PayPal (and additionally in the case of Virgin, by debit card).  The ACCC’s case was that the Booking and Service Fee was only disclosed to consumers once they had moved through a number of stages of the booking process.  

“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.

“While the Court found that the ACCC had not established all of the allegations against Jetstar and Virgin, the findings that some of their conduct was misleading are significant.”

A hearing on relief will be held on a date to be fixed by the Court. The ACCC is considering the judgment.

Downloads