Component pricing and the travel industry—frequently asked questions

Section 48 of the Australian Consumer Law (ACL), which is contained in a schedule to the Competition and Consumer Act 2010, requires that where component pricing is used in a representation made by a business to consumers, a single price must also be provided. The single price must be stated as prominently as any component and must be inclusive of all quantifiable amounts so that it shows the minimum total price payable by a consumer to obtain the relevant product or service.

The travel industry frequently uses component pricing in its representations to consumers. The questions and answers below have been developed to better explain the application of s. 48 to the industry.

• Advertising
• Single price
• Other issues

Advertising

The price of some components for travel can change, such as fluctuations in currency or potential changes to government or statutory charges. How do I advertise a total price in these circumstances?

If a component of the cost of travel may vary or fluctuate, you should calculate that component based on information available at the time you are making the representation and use this to calculate a single price. You also need to clearly advise consumers of the basis on which the total was calculated and that it may be subject to change.

I would like to advertise nationally but component costs can vary depending on the customer’s point of departure (e.g. Sydney or Perth airports). How do I provide a single price?

If you wish to advertise nationally but the single price may vary depending on the location of the customer, you should consider listing the prices for all options (clearly indicating the conditions of each price) or alternatively think about targeting your advertising to particular geographic regions.

If I have already printed travel brochures and other advertisements that do not comply with s. 48, do I need to withdraw or change them?

The amendments to s. 48 are law, which means that you need to ensure all your current advertising is compliant. This may mean that you need to amend or withdraw some advertisements that use component pricing without providing a prominent total.

When I am advertising a travel package, do I need to provide a single price for the base level or basic package?

Where you advertise a travel package, you need to provide a single price that reflects the minimum total cost a consumer is required to pay to purchase and use that travel. Typically, this will be the basic package.

Where you are specifically advertising a deluxe or luxury package, you should state the minimum cost for a consumer to purchase this type of travel.

I advertise and offer a number of different packages and tours for sale. Do the prices I provide need to be inclusive of all compulsory costs? Is this still the case where the payment is not collected by me but required to be paid to a third party in using the travel?

The ACCC’s view is that the prices advertised for packages, tours and other travel should be inclusive of all compulsory costs that a consumer is required to pay to book and purchase the travel. This includes amounts that the consumer is required to pay directly to a third party as part of that travel offer to use what has been paid for.

If I advertise travel or a package at a single total price, does this prevent me from negotiating the amount with consumers?

Advertising a single price for travel does not prevent price negotiations.

Are the items in ss. 48(7)(a)–(c) the only things I need to include in a single price representation?

The items listed in ss. 48(7)(a)–(c) indicate the types of components that must be included in a single price. However, the ACCC’s view is that this is not an exhaustive list.

Does compliance with s. 48 mean that I have met my trading obligations?

No, complying with s. 48 does not mean that you have complied with the ACL more broadly. You should take particular care to ensure that your advertising does not have the potential to mislead or deceive consumers or to misrepresent the travel that you are offering.

I often advertise travel packages and accommodation at a per person, twin share rate. These offers are also available to single travellers, but are usually more expensive. Am I able to continue to advertise twin share prices or does the single price as it applies to an individual need to be given?

You are able to advertise travel at a per person twin share rate; however, you must make it clear to consumers that this price only applies to twin share. The advertisement should in no way suggest that the price for a single would be half this amount if this is not the case. You may like to consider advertising the price for both options.

If a tour or ride is advertised at a price that applies only where two or more people are taking part, but a single person may also choose to take part at a more expensive rate, what should I use as a basis for the single price?

If you are advertising a tour or ride for two or more people, you should provide the corresponding price. It is important, however, that you do not suggest that it is available to one person for half that amount if this is not correct. If the price for an individual is more, you may like to advertise that amount separately.

Single price

What is the single price?

Under s. 48, the single price is the total minimum price a consumer needs to pay to obtain the relevant product or service. For the travel industry, it will generally be the dollar amount the consumer must pay to purchase and use the travel, which can be calculated by adding up all components quantifiable at the time the representation is made. This may include components such as airfare, accommodation, transfers, meals, taxes, tours, other charges and any additional inclusions.

Can I include optional travel extras in the single price?

Optional extras should not form part of the single price. The single price should represent the base cost for the consumer to buy the travel, although you may provide additional information about extras in your advertisement if you wish.

How should I state the single price?

The single price must be represented in a way that is at least as prominent as any component price shown. In considering this, you should think about the font used for the text, its size and colour, its contrast with the advertisement’s background and the medium in which you are advertising.

Can I use ‘from’ pricing?

Travel agents are able to state a single price as being ‘from’ provided it is the minimum total cost for a consumer to obtain the travel and that the use of the term does not have the potential to mislead or deceive consumers.

When is a component quantifiable?

A component is quantifiable if it can be readily converted into a dollar amount. As stated above, if a component fluctuates or varies, you should calculate the component based on information available at that time and clearly advise consumers that it may be subject to change. The fact that a component may vary does not mean it cannot be quantified.

Other issues

Am I still able to use component pricing?

Yes, you can still choose to use component pricing; however, if you do so, you must provide a single price as prominently as any component.

Does s. 48 of the ACL apply to corporate travel advertised to other businesses?

Where an advertisement or price representation for corporate travel is made exclusively to another business, it does not need to comply with the single price requirement of s. 48. However, if the advertisement may be viewed by both businesses and consumers, you need to provide a single price for consumers and, if you wish, one for businesses, if it differs.

When would an advertisement be taken as being exclusive from one business to another?

The exclusivity of a price representation being made to a business depends on the circumstances; however, as a general rule there should be no risk that a consumer might view and rely upon the advertisement.