ACCC clamps down on flight fees

Virgin will stop preselecting travel insurance for passengers during online booking after ACCC pressure.

Virgin boss John Borghetti with cabin crew in front of an Airbus SAS A330. Pic: Bloomberg

Virgin Australia has agreed to stop preselecting travel insurance for passengers booking online, as the consumer watchdog cracks down on tactics used through the flight booking process.

The development followed talks with the Australian Competition and Consumer Commission and leaves Qantas’ low-cost carrier Jetstar and Virgin (VAH) subsidiary Tigerair Australia as the only domestic carriers that force customers to deselect the travel insurance option should they not require it.

Qantas does not have travel insurance preselected.

A test run by The Australian this morning shows both Jetstar and Tigerair Australia also automatically select a baggage service for customers at a cost, while Jetstar preselects specific seats at an additional cost, potentially leading to unnecessary fees for those not paying close attention through the booking process.

This is not an issue for Virgin Australia and Qantas, as all their fares allow seat selection and one item of checked baggage without additional fees.

ACCC chairman Rod Sims said the Virgin action came as the watchdog presses local carriers to completely abandon the practice of preselection.

“The ACCC has been concerned that the ‘opt-out’ model means that a number of consumers inadvertently end up paying for unwanted ‘pre-ticked’ extras,” he said.

“The ACCC will continue to work with other domestic airlines to end the practice of preselecting optional extras in the booking process, including baggage allowances, seat selection and travel insurance.”

Mr Sims pointed to the success of the New Zealand experience — whereby airlines recently agreed to stop preselection amid claims it breached the Fair Trading Act — as an example for where Australia was heading, with the threat of stronger action hanging over the local airlines.

“We’re certainly hopeful that (the domestic airlines) will make changes voluntarily in the short term, to the benefit of their customers, or the ACCC will explore other options,” he said.

The ACCC has already made airline fees a focus this year as it delivered new credit card surcharge rules that limited the booking costs to customers from September 1.

In a statement, Tigerair Australia defended the use of preselection through the booking process, while noting it had no plans to yield to the watchdog’s urgings at this stage.

“Tigerair Australia offers preselection of travel insurance and standard checked baggage to assist customers in carefully considering these two options,” the company said.

“The preselected items and all fees and charges are clearly outlined in the Tigerair Australia booking process to provide full transparency to our customers.

“Tigerair Australia continually reviews its booking process to ensure it is easy, transparent and convenient, however we have no changes planned at this point in time.”

The Virgin Australia move to abandon preselection also comes on the heels of a Choice study that found travel insurance policies of the major local carriers was typically more expensive than stand-alone insurance purchases.