The Australian Competition and Consumer Commission has today welcomed proposed undertakings from Qantas and Virgin Blue not to exclude additional taxes, levies and charges from the advertised price of their airfares, ACCC Chairman, Professor Allan Fels, said today.
"Under the new policy advertised airfares will include all taxes, levies and charges applicable to airline tickets.
"The ACCC believes the changes will avoid confusion by consumers as to the actual prices they are likely to pay if they purchase airline tickets.
"The ACCC notes the growing number and value of taxes, levies and charges applicable to airline tickets.
The ACCC raised concerns with Qantas and Virgin Blue late last year that the headline airfares being advertised were not actually available, without consumers paying the additional taxes, levies and charges that apply to air travel, such as the Ansett levy and the Sydney Airport noise tax.
"The ACCC was concerned that consumers were responding to the representations of 'cheap' headline fares, only to find at the time of booking that the additional taxes, levies and charges added a substantial amount to the total cost of their ticket
"The ACCC considers that advertising a domestic or international airfare or other travel related products without disclosing the total price payable by the consumer
risks misleading consumers as to the total price payable. Not including these additional costs means that consumers only receive part of the price information. Failing to make the total price to be paid clear in advertisements is likely to mislead consumers and breach the Trade Practices Act 1974.
"Section 52 of the Act prohibits conduct that is misleading or deceptive. Section 53(e) of the Act prohibits a company from making a misleading representation as to the price of goods or services. Section 53C of the Act requires the full cash price of a good or service to be stated.
The ACCC welcomes the constructive approached adopted by Virgin Blue and by Qantas in agreeing to lead industry standards on price advertising.
"The undertakings they are providing are under section 87B of the Act and are court-enforceable.
"The ACCC has today placed the travel industry on notice that it expects all forms of price advertising to comply with the Act.
"The ACCC will provide a transition period for the industry to amend its advertising. Airlines, travel agents, Internet travel sellers, accommodation providers and all other industry operators have until 30 June 2002 to ensure price advertising complies with the Act. The ACCC is arranging to provide further guidance to the industry, including through its website.
"Advertisers who fail to comply may find themselves in court", Professor Fels said.
"The industry must not make representations as to the price of any airfare or travel related product, such as holiday packages, without specifying within the advertisement the total price (being the total price payable by a consumer as a necessary pre-condition to supplying the represented services to the consumer) with at least equal prominence to any component amounts of the total price that may also be specified or referred to in the advertisement.
"The exception is where the additional cost involves a tax, levy, fee or other charge which the purchaser would otherwise be directly liable to pay - for example, additional departure taxes at some international airports. Businesses may state that these sorts of costs are extra to the represented price provided:
a) that the price is not advertised as an all-inclusive 'fly away - no more to pay' offer
b) if known, the nature and amount of the additional costs are clearly and prominently disclosed in the advertisement
c) that the payment of these sorts of additional costs are not a necessary precondition to the supply of the represented services by the business to the purchaser.
"These principles are of general application to all advertisers. Businesses must remember that where a price is quoted, it must be clear to the consumer exactly how much he or she will be expected to pay.
"Advertising the 'price' plays an important role in the travel industry - it can give an airline an edge over its competitors and plays a fundamental role in attracting customers.
"Price is probably the most important influence on a consumer's purchasing decision. Like most businesses, the travel industry relies heavily on the power of advertising at all levels - from national campaigns using television, radio, billboards and press, through to the latest in electronic advertising on the Internet. Whatever the level, consumers expect advertising to be fair, responsible and honest".