SUBMISSION BY VIRGIN BLUE TO THE REVIEW BY THE COMMONWEALTH GOVERNMENT OF AUSTRALIAN CONSUMER LAW - Dayna Hall Legal Counsel Virgin Blue Airlines ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SUBMISSION BY VIRGIN BLUE TO THE REVIEW BY THE
COMMONWEALTH GOVERNMENT OF AUSTRALIAN
CONSUMER LAW
Dayna Hall
Legal Counsel
Virgin Blue Airlines
Ph: (07) 3295 3000
Fax: (07) 3295 3996
Legal\102899910.2 11. Executive Summary
Virgin Blue Airlines Pty Ltd (Virgin Blue) is committed to providing safe and affordable air
travel to all members of the public and welcomes the opportunity to make submissions
concerning the introduction of a National Consumer Law.
Virgin Blue has always, and continues to take its obligations to consumers very seriously. We
sell a highly visible product and have different fare rules in order to provide consumers with a
choice along a continuum which divides flexibility and price. Virgin Blue’s fare rules are
clearly and effectively displayed on Virgin Blue’s website, and are brought to the attention of
consumers before they purchase their airfares. Consumers are provided with an easy to read
matrix of fare type, clear links to an easy-reference fare type guide and the fare rules
applicable to their chosen booking. Finally, before proceeding to pay for the booking,
consumers must read and agree to Virgin Blue’s conditions of carriage. As a result, the use of
standard form contracts by Virgin Blue has never been a case of “hide it in the small print”.
Additionally, Virgin Blue maintains dedicated resources to deal with consumer issues. It is
interesting to note that Consumer Affairs Victoria (CAV) reported to us that they had received
only 12 complaints and 18 enquiries in the period of 1 July 2007 – 15 February 2008. Virgin
Blue flew an estimated 3,086,115 passengers into and out of Tullamarine Airport in Victoria
during that period which means only approximately 0.00097% of guests carried through
Victoria during that period, made an enquiry to CAV. This is indicative of our high levels of
customer service.
In fact, Virgin Blue prides itself on being consumer friendly. In particular the extent to which
it has increased competition in the Australian aviation market over the last 8 years; a result of
which has been the marked decrease in the price of domestic air travel. Standard form
contracts have been used effectively during this period to strike a balance between the
legitimate interests of consumers and carriers. How effective that balance has been, is
reflected in the growth of aviation over the last decade.
One of the core challenges for Virgin Blue, particularly in the current economic climate, is to
continue to keep operating costs low to enable affordable travel for all Australians.
Restrictions on the use of standard terms and conditions of carriage (in conjunction with fare
rules) could make this difficult.
In an industry where there are many variables outside the airline’s control (such as weather,
airport curfews and unexpected technical issues) it is important that key terms and conditions
such as the ability to unilaterally change schedules, or the non-refundability of sale fares are
not struck out as being “unfair”.
Therefore, while Virgin Blue strongly supports the introduction of a national approach to
consumer law, it is important to ensure that any such laws do not have any unintended
consequences or stifle industries that rely on standard form contracts, such as the aviation
industry.
2. The Proposed Reforms – specific concerns
We note that in the information and consultation paper (the Paper), the legislative model is to
include the following features:
1. The concept of “unfair terms”
Legal\102899910.2 2The Paper provides that a term will be considered “unfair” when it causes a significant
imbalance in the parties’ rights and obligations arising under the contract, and it is not
reasonably necessary to protect the legitimate interests of the supplier.
We have provided comments on a selection of the examples of “unfair terms” given in the
Paper:
· Clauses that permit the supplier to unilaterally vary the terms of the contract
Being in a service industry, it is in Virgin Blue’s commercial interests to avoid delays
and to get passengers on their way as soon as possible. However, the reality in the
airline industry is that delays are sometimes unavoidable and as a result flight
schedules cannot be guaranteed. Therefore, it is imperative that Virgin Blue retain its
ability in the conditions of carriage to unilaterally change flight schedules, even after a
passenger has purchased a ticket.
We note that Virgin Blue (and other carriers) offer insurance products to passengers
who wish to pay a small fee to insure against unplanned and unexpected events. Such
products can assist passengers who have been disadvantaged by a change in flight
schedule.
· Clauses that prevent the consumer from cancelling a contract
It is not clear as to how broad this example is intended to be. In particular, it’s not
clear whether it is intended that when a contract is cancelled, all or part of the contract
price should be refundable.
Virgin Blue strongly objects to any suggestion that all contracts must be refundable
when cancelled.
It is commonly understood within the airline industry and the greater community that
sale fares are necessarily more restrictive than full price and flexible fares. It is
important to note that Virgin Blue (and most other carriers) offer a number of different
fare types with differing fare rules. The key difference between Virgin Blue’s fare
types is the varying levels of flexibility. Some fares can be cancelled or changed up to
24 hours after the flight departure. However, other cheaper fares have more restrictive
conditions – some are not refundable but a flight credit is given if cancelled, while
some of the most heavily discounted fares are forfeited in the event of cancellation. In
fact, having the variable fare types is one of the ways Virgin Blue is able to offer fares
at such affordable prices.
In Virgin Blue’s view, the availability of choice is actually a benefit to the consumer as
it gives them the opportunity to choose the level of flexibility that suits them. It
certainly isn’t unfair.
It is also again relevant to note that all passengers are encouraged to purchase travel
insurance to cover unexpected circumstances that may require them to cancel their
tickets.
· Clauses that exclude liability for harm resulting from the supplier’s actions
Virgin Blue does not consider it to be unfair in all circumstances to limit liability for
harm resulting from the supplier’s actions.
For example, as stated above, flight schedules are subject to change for a variety of
legitimate reasons. Virgin Blue considers it entirely reasonable to exclude liability for
any loss suffered as a result of such changes (subject of course to the statutory service
warranties contained in the Trade Practices Act).
Legal\102899910.2 3To take the example further, where a plane is unable to fly as scheduled for
operational reasons – such as weather or technical difficulties, there is strong
recognition in the regulation of the aviation industry that safety is the ultimate priority.
There should be no commercial pressure on carriers to carry passengers in sub optimal
conditions (such commercial pressure including the possibility of being liable for
passenger’s consequential loss in the event a schedule is changed).
In addition, it should also be made clear in any unfair contracts legislation, that the
limitation or exclusion of liability in accordance with legislation is not unfair (for
example the Civil Aviation (Carrier’s Liability) Act 1959).
2. The concept that certain contract terms will be banned
The Paper also provides that certain contract terms will be banned on the basis that they are
considered, in all the circumstances, to be unfair.
We have provided some comments on a couple of the “banned” examples given in the Paper:
· Entire agreement clauses
It is important for both suppliers and consumers for there to be certainty as to any
contractual relationship between them. Therefore, Virgin Blue does not consider that
“entire agreement” clauses ought to be automatically banned on the basis that they are
unfair.
· Terms under which consumers acknowledge that they have read or understood the
contract
When booking over the internet (which is the predominant booking method for Virgin
Blue passengers) obviously passengers cannot physically sign the contract of carriage.
Therefore all passengers must tick a check box indicating that they understand and accept
the terms and conditions of carriage. Bookings cannot be processed until this has
occurred.
Passengers are given every opportunity to read the terms and conditions of carriage, and in
addition, the fare rules for the particular fare being purchased are clearly set out on the
booking screen. The fare rules provide an easy to read, plain English explanation of the
key terms of the fare and can be read directly on the booking screen without the
requirement to follow hyperlinks.
It is reasonable and fair for passengers to be held to the terms and conditions of carriage
and fare rules they have agreed to. Failing to read and comply with them properly is not a
sufficient reason, in Virgin Blue’s view, for passengers to be able to avoid their
application.
If every passenger could avoid the conditions of carriage or fare rules by simply stating
that they did not understand their application, it would impose an unreasonable cost on
airlines and the cost of tickets would necessarily rise to cover these additional costs.
3. Unintended consequences
As can be seen in the examples set out above, even clauses that have been tentatively labelled
as “unfair terms” can have legitimate purposes. Therefore, the risk in labelling certain terms
across the board as unfair is that companies will unnecessarily be exposed to increased
litigation. This of course can ultimately lead to increased costs for consumers.
Legal\102899910.2 4So while Virgin Blue strongly supports the introduction of a national approach to consumer
law, it is important to ensure that companies are not prevented or discouraged from including
reasonably necessary terms in standard form contracts.
In circumstances where a company is confident that its standard form contracts contain clauses
which are reasonably necessary, it may be appropriate to introduce a mechanism whereby
companies can gain confirmation from the ACCC (or other appropriate body) that a particular
standard form contract does not contain terms that are unfair under the Trade Practices Act.
Legal\102899910.2 5You can also read
