CMA drip pricing probe into Virgin Atlantic Holidays ‘a surprise’

The Competition and Markets Authority (CMA) launched an investigation into a possible breach of the law on ‘drip pricing’ in travel last week in a move long anticipated in the sector.

But its choice of Virgin Atlantic Holidays as one of three companies under investigation, alongside rail travel platform Trainline and a driving school, was “a bit of a surprise”, according to industry lawyer and Themis Advisory director Jo Kolatsis, who suggested “they’re not one of the rogues” in the industry.

The CMA identified Virgin as one of up to 100 firms “sent advisory letters” last November and put “on notice of their [pricing] obligations under consumer law”.

More: CMA investigates Virgin Atlantic over holiday pricing

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

The notice of the investigation refers solely to Virgin Atlantic, although Virgin’s package sales are made through direct-sell operator Virgin Atlantic Holidays.

The CMA can impose a fine of up to 10% of turnover under its new enforcement powers.

Association of Atol Companies legal advisor Alan Bowen said other operators “will be concerned”, noting: “We’ve all been concerned the CMA is out to get someone.”

A second industry source suggested the CMA had “chosen someone of about medium size to make an example of”. However, the source suggested the investigation had “not changed the game” on pricing because the operator had been failing to include taxes and resort fees in the ‘pre-basket’ price shown to consumers.

A search this week for a two‑week, all-inclusive holiday in Riviera Cancun in October with Virgin Atlantic Holidays produced an offer price of £7,016.33 for two. This was repeated as the ‘total price’ upon clicking ‘View details’, with a note that guests “are required to pay a travel tax of $11 per adult (over 15 years old), subject to change” and “an additional Environmental Sanitation Tax of $2-$5 per room, per night”. The £7,016.33 sum then appeared as the ‘total to pay’.

A Virgin Atlantic Holidays spokesperson said: “Mandatory fees are indicated at multiple stages throughout the booking journey. We’re reviewing the points raised by the CMA carefully and will cooperate fully with its investigation.”

The outcome of the CMA’s initial investigation is expected in January.