Jetstar and Virgin fined over misleading fees

A Jetstar plane flies over Sydney. Photo / Getty

Low fares carrier Jetstar has been hit with a $545,000 (NZ$595,000) fine from the Federal Court for not always being upfront about booking and transaction fees on its website.

The fine is more than double that imposed on Virgin Australia which accepted a A$200,000 penalty last year for the same "drip pricing" issue.

The Australian Competition and Consumer Commission took action against the airlines in 2014 for "engaging in misleading and deceptive conduct and making false or misleading representations about the price of particular advertised airfares".

In late 2015, the Federal Court found Jetstar had misrepresented fares on its website in 2013, and mobile site in 2014, but other allegations brought by the ACCC were dismissed.

Virgin Australia was found to have made false or misleading representations about fares on its mobile site in 2014 but acted within the law in other instances.

In his ruling against Jetstar, Federal Court Judge Lindsay Foster said he was of the view a penalty of A$295,000 for the website conduct was appropriate and a penalty of A$250,000 for the mobile site conduct was in order.

"I regard the website conduct as more serious than the mobile site conduct, essentially because the website is used by consumers far more often than the mobile site in order to make bookings with Jetstar," said Justice Foster.

"These penalties are fixed at the lower end of the scale when regard is had to the maximum penalty that may be imposed in each case."

Both airlines have since addressed the issue of credit card fees, disclosing the charges upfront in the booking process.

ACCC Chairman Rod Sims said it was pleasing to see the courts taking this issue seriously and imposing appropriate penalties.

"I think it's fair to say the penalty reflects the amount of consumer angst out there," Mr Sims said.

"If you raise this topic a lot of people get very angry. They get right through the (airfare) booking process thinking they're going to pay one price only to be hit with extra charges at the end.

"I'm surprised companies treat their customers this way."

Under the Australian Consumer Law, Virgin Australia and Jetstar could have faced a maximum penalty of $1.1 million for each offence.

A Jetstar spokeswoman said they accepted the court's decision.

"We want our booking process to be clear for our customers," said the spokeswoman.

"That's why we made changes to our web and mobile sites to make the options available and fees that apply even clearer. These changes, made in 2014 were previously found to be satisfactory by the Federal Court."