Jetstar, Virgin face "drip pricing" allegations

Jetstar and Virgin Australia have been accused of “drip pricing” airfares as the Australian Competition and Consumer Commission began separate proceedings in the Federal Court against the two carriers.

The practice of drip pricing involves advertising a price at the start of the online purchasing process, then adding often unavoidable fees and charges with the end result that the consumers pay a higher price that advertised, sometimes without realising.

Specifically, the ACCC alleges that Jetstar and Virgin each advertised specific prices for certain domestic airfares on their websites and mobile sites, although those prices only applied when using particular payment methods.

Jetstar charged an additional $8.50 per person per domestic flight if payment was made by PayPal or any credit card apart from a Jetstar-branded credit card, while Virgin added $7.70 per passenger per booking if payment was made by credit or debit card, or via PayPal.

It also claims that both airlines failed to “adequately” disclose the additional booking and service fee. 

“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,” 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.”

According to the ACCC, these fees applied to the “substantial majority” of online bookings and should have been made clear within the initially advertised 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,” it said.

Consumer watchdog Choice welcomed the legal action, but insisted more must be done to ensure Australian consumers have access to “fair” airfares.

“The ACCC legal action, if successful, will force companies to advertise the true cost of a flight. It won’t stop companies charging outrageous prices to pay by credit card but it could force them to include the charge in the headline price,” spokesperson Tom Godfrey said.

“For too long, Australians purchasing flights have been slugged by a fee per passenger to pay using their credit card, the most convenient and commonly accepted way to pay."

According to a Choice review conducted earlier this year, consumers flying Qantas from Sydney to Melbourne can still pay 523% more than the average merchant service fee.