Domestic airlines Virgin Australia, Jetstar and Tiger Airways have agreed to stop pre-selecting the extras services offered on their online booking platforms following discussions with the Australian Competition and Consumer Commission. Virgin Australia decided to cease the pre-selection of travel insurance on their platform after the ACCC raised its concerns with the airlines. Jetstar and Tiger Airways followed suit within 48 hours, deciding to stop pre-selecting extras.

The ACCC’s Concern With Pre-Selecting Extras

The ACCC instigated talks with the domestic airlines due to concern that pre-selecting extras was unfair to consumers. The tactics included pre-selecting add-ons such as travel insurance, checked baggage, seat selection and even donations to charities. Instead of customers being required to select the extras they wanted to add to their flight purchase, the airlines would automatically select these extras and add them to the final price. Customers are required to un-select the extras if they do not want them.

The opt-out business practice concerned the ACCC who believed it was unfair for customers who would inadvertently pay more for the flights. The ACCC looked to the New Zealand Commerce Commission (NZCC) who took similar action against New Zealand businesses to stop the use of pre-selection and opt-out practices because it breached the Fair Trading Act (similar to the Australian Competition and Consumer Act 2010 (Cth)).

What are Pre-Selections?

Pre-selections are a type of drip pricing tactic, which is a business practice for which both Virgin Australia and Jetstar were fined earlier this year. In April 2016, the Federal Court found that the airlines had not been transparent about the pricing because they did not include the booking and service fees in their advertised price.

While it is acceptable for businesses to advertise the lower basic fee to attract customers, Australian Consumer Law requires that the businesses disclose any additional fees or charges that may be added to the base fee. The Federal Court found that Virgin Australia and Jetstar had been misleading and deceptive by not disclosing the booking and service fees.

Unlike booking and service fees, which are mandatory fees charged by the airlines, travel insurance and checked baggage are, by definition, ‘extras’ that not all customers choose to purchase.

Tiger Airways have argued that pre-selection of travel insurance and checked baggage helps their customer – travel insurance is important, and customers will save money by pre-purchasing checked baggage rather than pay the higher price at the airport. It has been found, however, that travel insurance through airlines is significantly higher than through independent providers. The ACCC’s rationale is that customers shouldn’t have to opt-out of unnecessary services when it can be just as easy for them to tick the box if they wanted.

Opt-Out Practices and Unfair Terms

The ACCC has also questioned other opt-out tactics including automatic contract renewals or rollovers. Automatic contract renewals or rollovers require the customer to actively opt-out if they do not wish to extend the contract. 

Last year, the Federal Court found that Christmas hamper retailer Chrisco included unfair terms in their lay-by contracts allowing Chrisco to continue taking fees through direct debit even after the purchase price had been paid. The terms required the customer to ‘opt-out’ of the direct debit plan once they had paid for their lay-by order.

Similarly, if the ACCC considered pre-selection to be unfair, they could take similar action. As it is, the ACCC are pleased that the airlines are voluntarily amending their pre-selection methods although they had previously threatened further action if the airlines were not compliant.

Key Takeaways

The ACCC encourages consumers to consider whether practices or terms in a contract are ‘unfair’ by questioning the following: 

  • Transparency;
  • Detriment to the customer;
  • Whether the term is necessary to protect the interests of the business; and
  • Whether the term brings about a significant imbalance between both parties’ rights and obligations. 

The ACCC’s concern is that the airlines’ pre-selection practice causes the consumer a financial detriment due to a lack of transparency. A customer could easily overlook a selected tick box so that they pay for an item they did not intend to purchase. 

If you have any questions about whether your business’ terms could fall foul of the ACL, get in touch with our consumer lawyers on 1300 544 755. 

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy