Jetstar Objects to Drip Pricing Fine

21st Apr 2016

Australian airline Jetstar is objecting to its penalty for drip pricing issued by the Australian Competition and Consumer Commission, believing it to be too big. A spokesman for the carrier said the following in a statement regarding the ruling:

"We want customers to clearly understand all fees and charges associated with their booking and that's why we've made changes to make it clearer at every step of the booking process what charges apply."

The spokesman declined to comment on the penalty while it is still before the Federal Court, which found Jetstar's and Virgin Australia's behaviour to be misleading, deceptive and in contravention of Australian consumer law.

Jetstar was found guilty of drip pricing, which is an illegal practice of promoting the fare at one price, but charging another as a result of "extra fees" and "add-ons" on both its main site and its mobile website and was ordered to pay a sum of $550,000.

The ACCC even asked for a larger fine against the carrier, since it was caught drip pricing twice.

On the other hand, Virgin Australia, which was also found guilty for the same offence, but only on its main website, was fined $200,000. Virgin accepted its fine and said in a statement:

"Virgin Australia is committed to ensuring that its booking and service fee is fair and simple for consumers to understand. We also provide a fee-free payment option on the Virgin Australia website and mobile site."

A spokesman for Charge Tom Godfrey said Jetstar's and Virgin Australia's drip pricing sounded some timely warning bells for the customers:

"The fact is companies are not allowed to advertise a headline price and then slowly reveal unavoidable extra fees and charges as you make your way through the online check-out. Drip pricing makes it extremely difficult for people to compare the true cost of products. It's unfair to consumers and it penalizes companies who do the right thing."

Australian carriers are obligated by the Australian consumer law to fully inform their customers who book a fare online of any and all fees they might be imposed for using their credit cards, as well as to offer suggestions as to how they can avoid some of the fees.