Jetstar's ticket fee ruled illegal

[kamchatsky]

Jetstar's ticket fee ruled illegal | NEWS.com.au Business

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Jetstar's ticket fee ruled illegal

By Kate Adamson
August 05, 2007 06:00am

Article from: Sunday Herald Sun


VICTORIA'S air travellers will have more rights to change their travel plans without incurring huge penalty fees, after a landmark legal ruling this week.

Budget airline Jetstar was ordered by the Victorian Civil and Administrative Tribunal to refund $600 it charged a passenger for changing a name on a ticket.

The ruling was expected to force airlines to review their terms, which imposed heavy penalties for changing a ticket.

And consumer groups said the decision could also help curb bank penalty fees and charges by mobile phone companies.

VCAT found Jetstar had received an unfair "windfall" from the penalty fee it charged a Victorian woman merely to change the name on a return ticket from Melbourne to Honolulu.

The passenger paid $437.39 for the fare and was then charged $600.93 more to change the name on the Jet Saver ticket when her sister was unable to travel.

VCAT found that a name change did not cause any detriment to the airline and that the penalty was unfair under section 2B of the Fair Trading Act.

Consumer Affairs Victoria welcomed the ruling, saying it would allow other Victorian travellers to fight expensive penalty fees imposed by airlines.

"We call on Jetstar and other airlines operating in Victoria to remove similar terms from their contracts," a Consumer Affairs spokeswoman said.

Jetstar Spokeswoman Simone Pregellio said the airline was seeking legal advice on the ruling.

Qantas said it would not be affected by the ruling because it did not have the same condition in its fare rules.

 

[simongr]

Didnt cause detriment to the airline?

So I book 50 $3 tickets and then sell them on to people making chnages to the name... why does the government have to interfere in business. People buy cheap tickets with conditions attached and then complain that the conditions are harsh....

 

[Mal]

I'm interested in the finer details of this ruling.

I think it should get posted here AustLII - Victorian Civil and Administrative Tribunal Decisions in a few days, but unsure. Anyone know where I can get a copy of the decision? (Prefer online and free. Not really wanting to daytrip to VIC and pay $10/page (or higher!) for the information)


My initial views on the topic is that this is a fair cop for Jetstar and they should pay. Fees for changes should be representative of the net cost to an organisation of the change. In the Jetstar case, the cost to them would have been maybe $50 for the change. However, I also agree that they should penalise people if they choose to abuse the system and thus cost Jetstar in the case of reselling an unwanted ticket that is worth more, or speculative buying of sale tickets for resale. Hence why I'm curious as to why the ruling was made in the way it was.

 

[oz_mark]

Didnt cause detriment to the airline?

So I book 50 $3 tickets and then sell them on to people making chnages to the name... why does the government have to interfere in business. People buy cheap tickets with conditions attached and then complain that the conditions are harsh....

Due to the imbalance in strength between consumers and businesses, there is a framework in place to protect consumers. Business can recover their costs if someone wished to change a contractual arrangement, but they cannot profit from it.

I don't know how Jetstar came to the fee calculation they did, but Name Changes are not $600. It is not the province of businesses to penalise people. That is a legal matter, and ultimately penalties can only be levied on people through the legal system.

 

[benhadi]

I think it's good news for us consumers. Firstly, court rulings have nothing to do with the government, so to say the government is interfering with the business world is somewhat inaccurate. They do manipulate it in some ways, i.e. create new legislations etc, but as mentioned earlier, they're supposed to protect consumers.

While i agree that not charging a fee for changes to heavily discounted tickets may cause Jetstar some business, it is free to impose a condition that tickets are not to be re-sold. it is not up to Jetstar to enforce that rule though, because it is out of their jurisdiction. Jetstar in this case cannot be the executive, the enforcer, the proscecutor and the executer. That's why we have the legal system.

Airline industry is about competition now. Jetstar may want to consider being competitive - Southwest Airlines in America is a budget airline who's very competitive and whilst they offer heavily discounted sale fares, ALL their fares are fully transferrable, name-changeable etc. And they're one of the most profitable airlines in America. So i don't believe Jetstar will go bust if they implement this system. If anything at all, they will benefit from the good publicity and consumer confidence in using their product.

Jetstar won't lose any money if their cheap tickets are re-sold by a 3rd party for a profit (not that i condone it). It just means somebody else is making a profit along the way....illegally.

 

[serfty]

I got the impression reading the article that the $437.39 may have been an introductory/promotional fare The additional $600.93 was the cost of re booking a new fare with the original $437.39 being applied as a credit for part payment, with a fee added ($75?).

more here: Jetstar Airways Pty Ltd - Fare Types

Flight Date or Time or Passenger Name Change via Telephone Reservations, GDS, GSA or at Airports:

International flights to/from Australia (excluding
Trans-Tasman flights) operated by Jetstar (JQ):
Up to 24 hours prior to departure,
$75AUD* per passenger per flight
plus any fare difference to re-book​

 

[simongr]

I think it's good news for us consumers. Firstly, court rulings have nothing to do with the government, so to say the government is interfering with the business world is somewhat inaccurate. They do manipulate it in some ways, i.e. create new legislations etc, but as mentioned earlier, they're supposed to protect consumers.

Apologies for that - I often see government/legal system as interchangeable as it is so often one driving the other or allowing the other to run rampant.

I feel that much time and money is wasted by people running to the courts for their perceived inequities.

 

[benhadi]

Simongr - your opinion about the legal system is correct if we were in a 3rd world democracy (don't think i need to name the countries), whereby the democracy is a perceived one, and whereby politicians control the judiciary and the police, and the whole election process.

But in Australia, this certainly isn't the case (one would hope!). Thank God for press freedom.

This kind of thing (i.e. the latest Jetstar ruling) will never happen in a 3rd world democracy. If it did, the judge will be sacked the following day, and we'll never hear about either anyway.

 

[NM]

I got the impression reading the article that the $437.39 may have been an introductory/promotional fare The additional $600.93 was the cost of re booking a new fare with the original $437.39 being applied as a credit for part payment, with a fee added ($75?).

I believe you are correct. Now what happens when someone makes a similar challenge that a date change should warrant a huge "penalty" fee? Just imagine buying a cheap into/special fare and then wanting to change the date to be, say, school holidays. The "cost" to the airline to make such an administrative change is minimal, but the fare for that date may be $600 more than the special fare originally paid.

I think some people may suggest the actual cost to the airline is similar in this case to the example that went to the VCAT.

I don't like defending Jetstar or their policies, but in this case the passenger purchased a cheap fare that came with many restrictions. Airlines offer different fares with different levels of restrictions, hoping that people will purchase the more expensive fares because they want or need the flexibility that comes with less restrictions. If we are going to demand cheaper and cheaper fares, then we need to accept the restrictions that comes with them.

If the original passenger was unable to travel due to legitimate reasons, then I would expect their travel insurance should cover the non-refundable portion of the air fare and other pre-paid costs.

 

[oz_mark]

I believe you are correct. Now what happens when someone makes a similar challenge that a date change should warrant a huge "penalty" fee? Just imagine buying a cheap into/special fare and then wanting to change the date to be, say, school holidays. The "cost" to the airline to make such an administrative change is minimal, but the fare for that date may be $600 more than the special fare originally paid.

I think some people may suggest the actual cost to the airline is similar in this case to the example that went to the VCAT.

I don't like defending Jetstar or their policies, but in this case the passenger purchased a cheap fare that came with many restrictions. Airlines offer different fares with different levels of restrictions, hoping that people will purchase the more expensive fares because they want or need the flexibility that comes with less restrictions. If we are going to demand cheaper and cheaper fares, then we need to accept the restrictions that comes with them.

If the original passenger was unable to travel due to legitimate reasons, then I would expect their travel insurance should cover the non-refundable portion of the air fare and other pre-paid costs.

Yes, but we have a legislated framework called the Trade Practices Act that businesses have to abide by. The can't sidestep law just by sticking something in their Terms and Conditions. Obviously in this case, Jetstar have failed to defend their Conditions against the law.

 

[adamonline]

I don't like defending Jetstar or their policies, but in this case the passenger purchased a cheap fare that came with many restrictions. Airlines offer different fares with different levels of restrictions, hoping that people will purchase the more expensive fares because they want or need the flexibility that comes with less restrictions. If we are going to demand cheaper and cheaper fares, then we need to accept the restrictions that comes with them.

Tiger are doing things differently with their domestic fares. All tickets carry the same restrictions no matter the fare. As the cheaper fares sell out only the more expensive ones are left. So there is room for a different model of ticket pricing. Also, Tiger don't allow name changes under any circumstances so this person is lucky they weren't flying with them (this might be something Jetstar is now considering)

 

[PPW]

I'm interested in the finer details of this ruling.
... Anyone know where I can get a copy of the decision? (Prefer online and free....

Mal, you have probably already seen it, but in case you haven't, here is the link to the VCAT decision:

Free v Jetstar Airways Pty Ltd (Civil Claims) [2007] VCAT 1405 (27 July 2007)

With regards
PPW

 

[JohnK]

Consumer Affairs Victoria welcomed the ruling, saying it would allow other Victorian travellers to fight expensive penalty fees imposed by airlines.

"We call on Jetstar and other airlines operating in Victoria to remove similar terms from their contracts," a Consumer Affairs spokeswoman said.

Glad to see that Victoria is doing something to help the consumer. When purchasing an airline ticket there are too many get out clauses for the airline if something goes wrong but the consumer needs to purchase the highest price tickets to be able to have some flexibility.

Was there another ruling in Victoria recently regarding a hotel chain? Oz_mark may remember the details.

 

[Keith009]

Didnt cause detriment to the airline?

So I book 50 $3 tickets and then sell them on to people making chnages to the name... why does the government have to interfere in business. People buy cheap tickets with conditions attached and then complain that the conditions are harsh....

Court rulings (ok VCAT in this case) are usually very dependent on facts/circumstances presented in a particular case. It does not mean that every single person bringing such a case would succeed. It wouldn't take a lot for good legal advice to differentiate the facts and identify "detriment to the airline" under the more extreme circumstances you've pointed out. Booking 50 $3 tickets and selling them on to people by making changes to the name would be considered unconscionable conduct in contract and thus making a contract null and void (ie JQ has the right to refuse passage). The law works.

 

[serfty]

I read the VCAT ruling and if I understood it correctly, the main gist was that the purchaser had no chance to negotiate a 'fair' contract purchasing on-line, as a result the prevailing T&C's were subject to a 'fairness' assessment.

The T&C's are the same for change of name as they are for change of flight, cf $75 per sector + fare differences. However, the ruling was along the lines that a while change of flight is to effectively provide a different service (i.e. a seat on another flight); a change of name in an existing booking for the same flight(s) does not vary the service.

Under these terms the clause in relation to change of name requiring a payment of any fare difference was deemed unfair. Contrasting this, payment of fare difference in relation to a change of flight is not. As a result any clause in relation to payment of fare difference on a change of name (but not flight) is unfair and hence, invalid.

The ruling declared any monies paid in this case in relation to the fare difference were to be refunded.

 

[Mal]

I read the VCAT ruling and if I understood it correctly, the main gist was that the purchaser had no chance to negotiate a 'fair' contract purchasing on-line.

The T&C's are the same for change of name as they are for change of flight, cf $75 per sector + fare differences. However, the ruling was along the lines that a while change of flight is to effectivly provide a different service (i.e. a seat on another flight); a change of name does not vary the service.

Under these terms the clause in relation to change of name requiring a payment of any fare difference is unfair; payment of fare difference in relation to a change of flight is not. As a result any clause in relation to payment of fare difference on a change of name is unfair and hence, invalid.

The ruling declared any monies paid in this case in relation to the fare difference were to be refunded.

Yep, fair summary of the ruling as I read it... (PS PPW thanks for posting it, I didn't get around to reading it before!)

I believe Jetstar changed their T&C by excluding Name Changes.