A selected 'drip' shot from the ACCC website

The Australian competition authority’s legal tackle on Jetstar and Virgin Australia for ‘drip’ pricing could force radical changes on how airlines compete for a sale.

Such as ‘strip’ pricing, where the full fare being offered is advertised fully inclusive of the credit or charge card fees that most customers will have to pay to complete their purchase, as well as ‘opt out’ extras like seat selection fees, or insurance.

The pitch then would be to offer consumers a click to strip option to remove what many would see as infantile and irritating attempts to gouge the buyer.

The current presumption on the allegedly offending airline booking sites of Jetstar and Virgin is that everyone wants all the extras, as well as ‘drip’ feeding the credit or charge card fees, which almost no-one can avoid, unless they want to be screwed by deals between banks and airlines in which they pay monthly or annual fees to use a facility in order to avoid the fee other card holders might pay.

To be blunt, most regular flyers might be surprised by the ACCC action, in that most of us are well aware of ‘drip’ pricing, and automatically take card fees into account when choosing an airline, and have inbuilt reflex untick the box responses to silly pre-selected options that seem designed to catch out cretins.

The NRMA for example always pre-selects for this consumer more costly membership options which the writer could only ever use if he lived in a city.  I have a postcode in which there is only one or two maisons Sandilands, and the whole lame attempt to gouge seems so easy to avoid if a motoring organisation used its data based marketing filters to work out the basic geography of this wide brown land and stopped trying to take rural residents for fools. (But I digress.)

The competition guardian may well be on the money when it comes to the desensitizing of consumers into a state where we don’t challenge the extra parastical dollar here or there, which could be applied to other goods and services providers not just airlines.

This by the way is the main part of the ACCC statement. All the rest of it is just ‘drip’ stuff we can do without.

The Australian Competition and Consumer Commission has instituted separate proceedings in the Federal Court against Jetstar Airways Pty Ltd (Jetstar) and Virgin Australia Airlines Pty Ltd (Virgin), alleging that each airline engaged in misleading or deceptive conduct and made false or misleading representations in relation to particular airfares.

The conduct which is the subject of the ACCC’s allegations in each 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 for consumers) are 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 alleges 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.

In relation to specific advertised airfares, the ACCC alleges that each airline failed to adequately disclose an additional Booking and Service Fee. In particular, it is 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 alleges that 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.

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