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OFT warns over misleading holiday and travel pricing

21/07    9 February 2007

The OFT has issued a warning to holiday and travel suppliers to ensure that they are not misleading consumers about prices. The warning comes as the Association of British Travel Agents (ABTA) has agreed to remind its members that their Code of Conduct, which is binding on all members, requires all fixed non-optional costs to be included in the basic advertised prices of their holidays. ABTA will take firm action against any member who fails to comply with its Code of Conduct.

The OFT is aware that certain fixed non-optional costs are frequently excluded from basic advertised holiday and travel prices. These include, for example, fuel supplements which can add up to £65 per person to the price of a flight or holiday. When the extra costs are added on the price is significantly higher than advertised. In one example, the price of a flight from the UK to Barcelona advertised at £19.99 was more than double when all fixed non–optional costs were included.

According to ABTA, its members are responsible for the sale of 90 per cent of foreign package holidays in the UK. The OFT now expects all holiday and travel suppliers, including non-ABTA members and airlines, to make sure they include all fixed non-optional costs in their basic headline prices so that they do not mislead consumers. Failure to comply in future will likely result in the OFT taking enforcement action.

John Fingleton, OFT Chief Executive said:

'Giving misleading price indications to consumers makes it very difficult for them to compare prices offered by different operators. It distorts consumer choice and competition and undermines consumer confidence in the market.'

The OFT welcomes the action taken by ABTA, and will monitor the situation, taking enforcement action where necessary against any airlines, tour operators or travel suppliers that fail to comply with the law.

NOTES

1. Part 8 of the Enterprise Act 2002 gives the OFT powers to obtain court orders against traders that breach a range of consumer legislation including in relation to misleading advertising and misleading price indications.

2. The Code of Practice for Traders on Price Indications, which was approved after widespread consultation by the Secretary of State for Trade and Industry, states at paragraph 2.2.14 that when advertising holiday and travel prices, any non-optional extra charges which are for fixed amounts should be included in the basic price and not shown as additions, unless they are only payable by some consumers. Contravention of the Code does not of itself give rise to any civil or criminal liability but evidence of breaches of the Code can be used to support a prosecution for the offence of giving a misleading price indication, contrary to section 20 of the Consumer Protection Act 1987. The Code is approved by the Consumer Protection (Code of Practice for Traders on Price Indications) Order 2005 SI 2005/2705)

3. In addition to ABTA, the OFT will be contacting the Federation of Tour Operators, the Association of Independent Tour Operators, the International Air Transport Association and the European Low Fares Airline Association, warning them that they should ensure their members do not mislead consumers about prices.

4. More information about ABTA and its Code of Conduct is available on the ABTA website.

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