International airlines face scrutiny over suspect pricing practice

Australia’s competition watchdog will focus on international airlines whose booking sites continue to pre-check options such as travel insurance after the nation’s two major low-cost carriers today confirmed they were ending the practice.

Tigerair Australia and Jetstar followed in the wake of Virgin Australia by announcing they were abandoning the practice after warnings against it from the  Australian Competition and Consumer Commission .

The ACCC is  worried that the “opt out’’ model, which is not used by Qantas,  was leading consumers to unintentionally pay for unwanted extras that were “pre-ticked’’ on the airline websites.

A survey by Australian consumer group Choice found families could save hundreds of dollars on travel insurance by unticking the boxes on some airline websites and buying their insurance elsewhere.

The Australian action mirrors a similar campaign by the New Zealand Commerce Commission, which last year called on all New Zealand businesses to end “opt out” pricing and which has also pursued international carriers.

However, the Australian airlines are moving at significantly different paces when it comes to axing the practice.

Virgin stopped pre-selection travel insurance earlier this week and Tigerair said it had removed pre-selection of travel insurance and checked baggage from today (Friday).

It vowed to continue to highlight available  options  throughout the booking process.

“Tigerair Australia recommends that customers purchase travel insurance given its importance in the event of any disruption or change of circumstance,’’ the airline  said. “Additionally, Tigerair Australia gives customers the opportunity to purchase checked baggage at a cost-effective price during the booking process as it is always much higher to pay it for at the airport.’’

Jetstar told the ACCC it would stop pre-selecting extras checked baggage, seat selection, travel insurance and charity donations on its online booking platforms from July next year.

The commission said it would have preferred the Jetstar change to have been made earlier but it welcomed the decision as a positive move for Australian consumers.

 “Jetstar’s announcement is another step forward in the ACCC’s continuing effort to end pre-selection conduct in the Australian airline industry,’’ 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.''