The Australian consumer regulator, the Australian Competition & Consumer Commission (ACCC) has obtained the agreement of Virgin Australia, Jetstar Airways and Tigerair Australia to change their online booking models for adding extra charges.

The airlines have agreed to change from a pre-selected (‘opt out’) model to a selected (‘opt in’) model for extra charges for checked baggage, seat selection and travel insurance in the online booking process. Note that Qantas Airways does not have pre-selected extra charges on its online booking platforms.
 

Examples of ‘opt in’ and ‘opt out’ choices for extra charges

Virgin Australia has adopted a ‘opt in’ model for extra charges.

In the online booking process, extra checked baggage, carbon offset, car hire and travel insurance are available for purchase. They are added to the fare by using the [Select] button.

Jetstar Airways has a mixture of choices until 1 July 2017. Examples of ‘opt out’ choices are checked baggage and travel insurance. Extra charges for these are added to the fare unless the [Remove X] button is clicked. Jetstar has a mandatory field, which is neither ‘opt in’ nor ‘opt out’. It is a carbon offset charge where the consumer must either click [yes] or click [no] before proceeding with the booking.
 

What are the ACCC’s concerns with the pre-selection (the ‘opt out’) model?

The ACCC’s concerns with pre-selection are based on the fact that the booking process is not transparent in terms of the air fare payable.

Jetstar’s disclosure in the booking process that: “Some products and services throughout our booking process have been pre-selected for your convenience” is considered to be misleading by the ACCC because of its lack of price transparency for consumers, who find out about extras added to their airfares at various stages during the booking process.
 

How will the ACCC will enforce ‘opt in’ pricing for online air travel bookings?

• The ACCC will require ‘opt in’ pricing for all domestic and international airlines operating in Australia
  
  In its Media Release, ACCC Chairman Rod Sims said:
  
  The ACCC will continue to engage with the remaining domestic airlines that still pre-select extras, and urge them to follow suit.
  
  The ACCC will also turn its attention to international airlines operating within Australia which continue to pre-select extras.
   

• Does the ‘opt in’ model include mandatory fields?
  
  The ACCC has not given guidance as to whether the use of mandatory fields is acceptable, as an alternative to the [Select] button for the ‘opt in’ model.
  
  Some guidance can be derived from the use of the expression ‘pre-select’ by the ACCC. It implies that the ‘mandatory field’ model as used by Jetstar for carbon offsets where the consumer must click either [yes] or [no] is acceptable.
  
  This interpretation would be in line with the views of the Commerce Commission New Zealand which has stated when dealing with this issue:
  
  Consumers are perfectly capable of deciding for themselves whether they want to pay for additional products or services. If a company is concerned that its customers need insurance then a suitable approach is to require them to tick ‘yes’ or ‘no’ in a mandatory field and leave it in their hands.

© Copyright 2022 Cordato Partners