Right price ... airlines will now need to show the full cost of a flight.Credit: Rob Homer
The most comprehensive overhaul of travel consumer protection laws in Australia's history is under way as part of a review of consumer rights ordered by state and federal consumer affairs ministers.
For the first time, a travel compensation scheme that covers all sellers of travel products airlines, hire-car companies and accommodation providers and not just the travel agents covered by the current scheme is on the table.
This would make Australia the undisputed world leader in travel consumer protection, a reputation it has built through the Travel Compensation Fund, which has covered travel agents' customers for the past 20 years.
The reforms are in addition to amendments to the Trade Practices Act, effective from this Tuesday, which outlaw so-called component pricing, where taxes and charges are either hidden or "asterisked".
This means an air fare sale launched in Australia by Tiger Airways as late as this month, advertising "free" air fares that required the payment of additional taxes and charges, will be illegal from this week.
The reforms outlaw component pricing, where taxes and charges are hidden.
The Tiger sale broke a voluntary agreement observed by Australia's domestic airlines for the past three years to advertise only fully inclusive air fares, even though some travel agents and online travel retailers continue with the practice.
Component pricing remains rampant in most countries in Asia, where consumer protection laws are either weak or non-existent. In their home markets, Tiger Airways in Singapore and AirAsia in Malaysia, for example, advertise all fares without taxes and charges, which can double or triple the rates consumers think they will pay.
The Trade Practices Act changes are part of an economy-wide crackdown on component pricing that will, for example, make it illegal for new-car dealers to advertise prices that do not include on-road costs and fabricated extras such as dealer delivery charges.
The Australian Competition and Consumer Commission also faces a formidable challenge in making hire-car companies conform, as their advertised rates have, until now, excluded extras.
Meanwhile, the Ministerial Council on Consumer Affairs, representing state and federal consumer affairs ministers, launched the wider review of consumer protection laws at a meeting in Hobart on May 8.
The Federal Consumer Affairs Minister and Assistant Treasurer, Chris Bowen, says the review is long overdue because of changes in the way travel is sold since the rise of the internet.
At present, for example, only those consumers who book a package air travel and accommodation through a licensed travel agent, a tiny minority are covered in the event of the collapse of an airline. Most air travellers, who buy tickets directly from airlines over the internet, are on their own if an airline collapses. The same applies when buying directly from car and accommodation providers.
"It's huge," Travel Compensation Fund chief executive Glen Wells says of the review. "They're talking about covering people who sell dive tours in Cairns, for example. It's a very wide-ranging review and there's a huge amount involved."
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