Jetstar and Virgin have been fined hundreds of thousands of dollars for drip pricing, the practice of advertising a cheap airfare online, then adding a range of fees and charges later, pushing up the final price.
The Federal Court has ordered Jetstar to pay a $545,000 penalty and Virgin Australia $200,000 for breaches of Australian Consumer Law.
Jetstar was found to have made false or misleading representations about airfares on its website in 2013 and its mobile site in 2014.
Virgin was found to have made false or misleading representations on its mobile site in 2014.
Drip pricing include the airlines insisting only certain payment methods are acceptable, ultimately adding to the cost of the fare.
The consumer watchdog’s examples included Jetstar adding $8.50 and Virgin $7.70 in credit card booking fees.
Both airlines have since made changes to card payment fees.
Justice Foster told the court the penalties are designed to discourage similar behaviour by others.
The court action was taken by consumer watchdog the ACCC (Australian Competition and Consumer Competition) which was concerned that drip pricing drew people into an online purchase process with a headline price, but failed to disclose of additional fees.
“As a result of the ACCC’s enforcement and compliance actions, businesses across several industries, including ticketing and accommodation, have now improved their online booking practices to provide adequate disclosure of additional fees and charges that are likely to apply,” says ACCC chairman Rod Sims.
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