The consumer watchdog has launched legal action against two major airlines for misleading and deceptive conduct over the price of airfares.

The Australian Competition and Consumer Commission (ACCC) is taking action against Jetstar and Virgin Australia over the practice of ‘drip pricing’, where a headline price is advertised at the beginning of a online purchase price but then fees are incrementally disclosed.

The ACCC alleges booking and service fees charged by both airlines were not adequately disclosed.

The watchdog alleges that the fees applied to a majority of online bookings and should have been disclosed upfront.

ACCC chairman Rod Sims says while both airlines made some adjustments to the disclosure of these fees during the ACCC’s investigation, it remains concerned with these pricing practices.

“The ACCC is concerned about advertising that draws consumers into an online purchase process but fails to provide sufficient upfront disclosure of additional fees and charges that are likely to apply,” he said.

“Drip pricing practices, such as those alleged by the ACCC in these proceedings, have the potential to cause both competition and consumer detriment.

“Not only can this practice lead to consumers potentially being misled, it may also make it difficult for businesses with more transparent pricing practices to compete on a level playing field.

“The ACCC continues to investigate businesses in other industries in relation to their practices of incremental disclosure of fees and charges.”

The case will be heard in Sydney in August.