CMA investigates Virgin Atlantic over holiday pricing

The Competition and Markets Authority (CMA) has launched an investigation into the pricing of package holidays sold by Virgin Atlantic.

 

The regulator has also announced probes into the pricing practices of Trainline and Red Driving School.

 

It said the consumer protection investigations have been launched “over concerns that customers were not shown the total price upfront when buying train and coach tickets, holidays or driving lessons”.

 

The investigations are part of a wider CMA clampdown on misleading pricing practices, including where mandatory charges are separated from the headline price – or added later in the buying process, known as drip pricing.

 

“These practices leave consumers facing unexpected costs or having to calculate the true cost themselves,” said the CMA.

 

“Such practices can also impact competition between businesses, as a firm using drip pricing may falsely appear to be cheaper than a competitor and attract more customers.”

 

More: Most holidaymakers aware of CMA pricing rules, research finds

 

CMA fines more businesses for failing to show ‘total’ prices

 

The Virgin Atlantic investigation will focus on whether mandatory resort fees and local taxes have been included in the upfront prices shown to customers buying package holidays.

 

These fees vary but can cost hundreds of pounds and significantly increase the price of a holiday.

 

Trainline is being investigated over whether all mandatory fees have been included in the upfront prices displayed to consumers buying train and coach tickets in advance on the Trainline app and website.

 

For train travel, the CMA observed transactions with fees ranging from £0.59 to £2.79. For coach bookings, it was a £1.50 booking fee. Both are costs that can add up for frequent travellers.

 

Red Driving School is being investigated over how a mandatory booking fee and ‘digital’ fee have been displayed to people booking driving lessons.

 

All firms under investigation were sent ‘advisory letters’ as part of the CMA’s first consumer protection drive using its new enforcement powers.

 

These letters put the businesses on notice and remind them of their obligations under consumer law, but the CMA said it remains concerned about their pricing practices following ongoing monitoring.

 

The CMA is at the beginning of its investigations and has reached no conclusions about whether these firms have broken the law.

 

If it finds there has been an infringement of the law, the CMA can order businesses to pay compensation to affected customers, as well as fining companies up to 10% of global turnover.

 

Emma Cochrane, executive director for consumer protection at the CMA, said: “At a time when many households are watching every pound they spend, it is important that people are not surprised by extra fees when booking train and coach tickets, holidays or driving lessons.

 

“Clear pricing helps people compare offers confidently and choose the option that works best for them. Unexpected mandatory charges make this much harder, which is why the CMA initially put these firms on notice over concerns about their pricing practices and is now opening formal investigations.

 

“The first price customers see should be the price they pay.”

 

A Virgin Atlantic Holidays spokesperson said: “We take our responsibility to customers incredibly seriously and we always want to ensure they can make an informed decision when booking a holiday with us.

 

“Mandatory fees are indicated at multiple stages throughout the booking journey, which are then paid locally by customers in the destination, along with any tourist taxes. We are reviewing the points raised by the CMA carefully and will cooperate fully with its investigation.”

 

Resort fees are common in destinations such as the US and apply depending on room type booked and travel dates. Along with tourist taxes, they are payable locally and are subject to change.

 

Since the CMA’s strengthened consumer powers came into force – which allow it to fine companies for breaches and secure refunds – the CMA has launched investigations across ticketing, gyms, homeware, online reviews and air travel, securing more than £1.95 million in refunds for UK consumers and levying fines close to £6.2 million.

 

Driving schools AA and BSM and ticketing site StubHub UK have already received fines and will refund customers after being investigated over their use of drip pricing.