Online travel booking site Webjet Marketing, a wholly owned subsidiary of the Webjet Group which listed on the ASX in September, has been taken to Federal Court by the ACCC over allegations that it made false and misleading representations to consumers about flight prices and bookings.
Earlier this week, the group revealed that bookings for the six-month period ending September 30, 2024, were down 8 per cent year-on-year, falling to 783,712. The confirmation that it was being taken to court sent Webjet Group shares down approximately 6 per cent mid-morning on Thursday.
Webjet’s app and website allow consumers to compare and book flights, hotels, car rental and travel insurance. The ACCC claims that Webjet breached Australian Consumer Law when it made statements on its app, in marketing emails, on social media and on its website about the minimum price of airfares which omitted compulsory fees charged by Webjet.
The statements included “flights from $x” when the price quoted excluded Webjet’s compulsory ‘Webjet servicing fee’ and ‘booking price guarantee’ fee which ranged from $34.90 to $54.90 per booking, depending on whether the flights were domestic, NZ/Pacific flights or other international flights.
Webjet Group Managing Director, Katrina Barry
The alleged misleading statements were made for various periods of up to five years between November 2018 to November 2023.
The ACCC also claims that the Webjet fees were not disclosed in Webjet’s social media posts. Although the Webjet Website, Webjet App and most promotional emails contained information about the Webjet fees, it was typically only accessible by scrolling towards the bottom of the relevant screen, was in fine print and not sufficiently clear or prominent.
“A statement about the lowest price must be a true minimum price, not a price subject to further fees and charges before a booking can be made,” said ACCC Chair Gina Cass-Gottlieb.
Furthermore, Webjet is alleged to have breached consumer law by displaying a confirmation page online and sending a confirmation email after taking payment for a completed flight booking when in fact – in respect of 382 bookings – it had not booked the flight with the airline.
In these instances, Webjet later allegedly sought additional payment from the consumers to complete the booking, or offered the consumer a refund for the flight, despite having earlier confirmed the booking.
Misleading representations of those flight confirmations were made over more than five years, between at least 1 November 2018 and 25 June 2024.
“We are very concerned about this alleged conduct by Webjet, which represented to consumers that their flight booking had been confirmed and left some consumers in the position of having to pay more to later complete the booking,” said Cass-Gottlieb said.
She also fired a warning shot at other businesses which have similar hidden fees. “We remind all businesses, whether they are online retailers or bricks and mortar stores, that they need to comply with the Australian Consumer Law by not misleading consumers and displaying prices clearly, including hidden fees and surcharges.”
By way of the proceedings against Webjet, the ACCC is seeking pecuniary penalties, declarations, injunctions, consumer redress, costs and other orders.
Webjet issued a statement to the ASX confirming the court proceedings. “Webjet is confident there is no widespread customer dissatisfaction with our offering, disclosure, service or pricing.” The company added that it has already “voluntarily and proactive” taken steps to “improve its disclosures of pricing and fees”.
The ACCC has been keenly watching developments within the aviation sector. Recently, its Domestic Airline Competition report found that domestic airline passengers face less choice and higher airfares following Rex’s recent exit from services between metropolitan cities. It found that since Rex suspended operations on its services between metropolitan cities on 31 July 2024, the average airfare on all major city routes increased by 13.3 per cent to September 2024.
In a separate case that the ACCC brought against Qantas, a Federal Court last month ordered the airline to pay $100 million in penalties for misleading consumers by offering and selling tickets for flights it had already decided to cancel, and by failing to promptly tell existing ticketholders of its decision.
