AVALON Airport sole carrier Jetstar faces allegations of deceptive conduct and false representation with its discount airfares.
The Australian Competition and Consumer Commission had instituted Federal Court action against the Qantas discount line, and Virgin Australia Airlines as well.
The ACCC is alleging that Jetstar and Virgin each made representations on their websites and mobile sites that certain domestic airfares were available for purchase at specific prices, when in fact those prices were only available if payment was made using particular methods.
Known as drip-pricing, the practice involves advertising a headline price at the beginning of an online purchasing process with additional fees and charges, which may be unavoidable for consumers, then incrementally disclosed or ‘dripped’.
This can result in consumers paying a higher price than the advertised price or spending more than they realise.
The ACCC action comes six months after Jetstar was granted a $5.5 million taxpayer bailout to stay at Avalon Airport for the next year.
Jetstar’s latest problems reflect wider problems at Avalon, where 800 Qantas maintenance jobs were recently lost and where a State Government commitment to spend $50 million on a rail link to the airport has gone begging.
Jetstar recently cut its flights from Avalon to Brisbane and its Geelong patronage has tumbled from 60 to 20 per cent of total passenger traffic.
Despite efforts by business leaders to exhort Geelong residents to use it or lose it, Jetstar faces ongoing complaints about a lack of available flights and cancellations.
Jetstar’s Australia and New Zealand CEO David Hall this week echoed those calls at a business meeting in Geelong this week.
The ACCC has alleged that both Jetstar and Virgin Australiua failed to adequately disclose an additional booking and service fee. In particular, it has alleged 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 alleged these fees applied to the substantial majority of online bookings and should have been disclosed upfront and prominently with or within headline prices. While both airlines made some adjustments to the disclosure of these fees during the period of the ACCC’s investigation, the ACCC remains concerned with these pricing practices.
“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.
“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. The ACCC continues to investigate businesses in other industries in relation to their practices of incremental disclosure of fees and charges,” Mr Sims said.
In the ACCC Compliance and Enforcement Policy for 2014, the ACCC announced that it was giving priority consideration to emerging consumer issues in the online marketplace, particularly those associated with drip pricing.
The ACCC is seeking pecuniary penalties, declarations, injunctions, corrective advertising and costs against each airline.
— NOEL MURPHY
