Travel Feature Articles
The Australian Consumer Law
Guide for the Travel and Accommodation Industry
Anthony J Cordato, Travel Lawyer, Sydney
Disappointed holidaymakers complain about bookings made
based on misleading advertising; ask for price reductions
for consumer guarantees which are not fulfilled; and ask for
refunds for cancellations.
If the travel or accommodation
provider fails to deal with the complaint, the holidaymaker
might take the complaint to a government body.
Drawing upon complaints received and requests
received from industry bodies for guidance upon the law, the
Australian Competition and Consumer Commission (the "ACCC")
has developed An industry guide to the Australian
Consumer Law for the travel and accommodation industries
(the "Guide"). It has prepared the guide in conjunction with
ASIC and the Consumer Affairs / Fair Trading / Commerce
Departments of the States and Territories around Australia.
The Guide was published on 16 August 2013.
contains general information as well as examples to guide
travel and accommodation businesses on their obligations
under the Australian Consumer Law. As such, it contains some
very useful insights into the current consumer protection
policy applied by the ACCC.
The Guide highlights three
- Travel Advertising
- Consumer Guarantees
- Refunds for cancellations
The commentary which follows is based on the
Commonwealth of Australia material in the Guide. The
Guide can be accessed on the ACCC website.
The ACCC requires single pricing
advertising, also known as component pricing.
There are two aspects:
- The first aspect is that the advertiser must
show a single (total) price which includes any tax,
duty, fee, levy or charge imposed. An example is
airport taxes payable on the overseas flight
component which should be included in the single
price advertised for a package holiday.
- The second aspect is that the single price must
be prominent so as to stand out. It must be in
comparable size and colour to the price components
The ACCC has identified advertising practices
which could mislead or deceive the traveller. For
- The hotel/resort should not mislead
consumers about its prices, quality, location or
amenities in its marketing.
Illustration Photos of a deluxe
two-bedroom suite on a hotel's website show
separate sleeping areas, but when the guests
arrive, they are shown to a room with two beds
right next to each other. The cost is $500 for a
room upgrade with separate sleeping areas.
ACCC's advice is that the hotel would
need to provide the room upgrade at no extra
cost for the website, otherwise the website
would be misleading.
As a rule, the ACCC
advises that the supplier should: warn of
the possibility that some rooms have
substantially different layouts or views;
include tags or titles on the photos of the room
type shown on the website; and clearly disclose
if a quality 'star' rating advertised is
self-rated. These items should appear on the
marketing material – the website, the print
advertisement, the brochures, and be available
at the time of booking.
The ACCC provides these examples in the guide:
- The hotel/resort must provide
accommodation which is fit for the specified
Illustration An accommodation
supplier accepts a booking from a family,
with a baby, and a baby’s cot is requested.
The ACCC's advice is that if the cot
is not provided within a reasonable time
after arrival, the consumer may terminate
the booking and ask for a full refund, or
choose to accept a price discount.
- Where vouchers or coupons are sold,
they must be fit for purpose. In
particular, limitations on their use
should be clear and the coupons should
be reasonably available for use.
Illustration A voucher is
purchased as part of an online buying
group for six nights' accommodation in a
'beach view' room at a resort, valid for
use within 12 months of purchase. One
month later, a booking is attempted, and
no 'beach view' room is available for
the times requested, or at any time
within the 12 months validity period.
The ACCC's advice is that this is
a major failure, and as a result, the
resort is liable to provide a full
refund, unless the consumer agrees to
accept an alternative room, with any
necessary price adjustment.
issues arise where there are 'hidden
extras' to be paid for, such as meals,
if the impression given is that they are
included in the price.
Travellers will usually be entitled
to a refund of the price paid if the
supplier cancels the travel or the
accommodation. In some circumstances, if
the traveller cancels, they will be
entitled to a refund.
The ACCC is
concerned about cancellation fees
charged by the travel and accommodation
industry where a refund is to be made.
The ACCC points to the prohibition
against unfair contract terms in the
Australian Consumer Law. It asks these
Do the terms cause a significant
imbalance of rights?
Are the terms not reasonably necessary
to protect the business?
Could the terms cause financial or other
detriment to a consumer?
recommends a clear cancellation
policy be included in the booking
conditions, which should provide for:
- Cancellations because of an
event outside of the supplier's and
the traveller's control.
The ACCC gives examples of
natural disasters, such as brushfire
or floods, where the accommodation
has been destroyed, access roads
have been closed, or access to an
area is unsafe.
advice is that the traveller is
entitled to a refund, subject to any
reasonable expenses incurred.
ACCC recognises that holidaymakers
are not entitled to a refund due to
poor or less than ideal weather,
such as no snow at a ski resort, and
rain at a beach getaway, unless
there is a specific contractual term
which covers refunds.
- Cancellations because the
consumer is unable to go ahead
by illness or change in
circumstances, and the
accommodation supplier is
entitled to charge a
The ACCC's advice to
accommodation suppliers on the
amount of the cancellation fee
to be charged is that they are
entitled to keep a deposit of up
to 10% of the total price of the
accommodation. If the supplier
desires to retain any more, the
supplier must justify it based
on actual or reasonable costs
incurred, and take into
consideration its ability to
re-book the accommodation at the
same time at the same price.
The ACCC provides some advice on
debiting credit cards - if the
cancellation fee is to be
debited from a credit card, then
the consumer must be advised of
this possibility at the time of
booking. Also, the refund is not
to be by way of a credit note
unless the consumer agrees.
- Transfers or
modifications of bookings by
Circumstances to be
covered for transfers or
modifications might include
- if the new date is in high
season and is more
expensive, if the consumer
makes repeated requests for
new dates, and if the
request relates to a
function, such as a wedding,
to be held on the premises.
The consumer must be given
the right to a refund, if
the consumer is requested to
pay extra costs because of
the transfer or
modification. The consumer
will need to be compensated
for their loss if the
cancellation is the
initiative of the supplier.
Australian Consumer Law
protects consumers who
purchase travel and
accommodation services for
personal use to any value -
even a luxury cruise. It
also protects businesses if
the cost is up to $40,000.
Travel and accommodation
businesses need to review
their advertising and their
booking conditions to ensure
they comply with the
Australian Consumer Law, as
outlined by the ACCC in the
Guide. They also need to
exclude liability for
consequential or associated
loss, and may limit
liability for personal
injury if they are a
The Guide should
be read in conjunction with
- The Australian Consumer
Law Guide for the Rental
Cars Industry, published by
EXTRA CHARGES FOR FLYING: HOW
AIRLINES ARE PROFITING
Do you find on-line booking fees, excess baggage fees, seat
selection fees, food and beverage charges and entertainment
charges by airlines to be annoying? Many passengers do,
especially if they have selected the basic fare to save
money and find these extra charges are ‘drip fed’ as they
click through the booking screens to make an on-line
booking; and to eat and drink and watch the in-flight
entertainment when they board.
Budget airlines have a
business model in which they charge separately for
everything - it is called component pricing. The air
traveller pays the basic air fare for a standard seat on the
plane. The passenger pays extra service charges for anything
Australian budget airlines are ‘world-class’ in
charging for extras. Tigerair ranks 6th in the world with
23.6% of its income being ancillary revenue in 2013. Jetstar
ranks 7th in the world with 20.6% of its income being
ancillary revenue in 2013. For Jetstar, this was $US31.60
per passenger per flight.
If it wasn't for ancillary revenue, we wouldn't be
making money in our business at the moment. It's that
important. according to Bruce Buchanan, former Jetstar
Group Chief Executive (2011).
The ACCC has taken an
interest to compel airlines to disclose one of these extras
- the on-line booking fees up front, when the air fare is
In June 2014, the ACCC took action against Jetstar and
Virgin to bring forward the disclosure of their on-line
booking fees of $8.50 for Jetstar and $7.70 for Virgin from
the last screen in the on-line booking process where payment
is requested to an early screen where details of the air
fare are displayed, in the interests of greater ‘price
The ACCC has succeeded and the on-line
booking fees are now disclosed with the air fare.
But has the ACCC gone far enough? Should the ACCC force
airlines to avoid misleading the travelling public by
displaying the other extra fees early in the booking process
and on their websites, rather than allowing the airlines to
‘drip price’ these?
THE SIX LESSONS THE WORLD LEARNED FROM THE TITANIC DISASTER
Anthony J Cordato, Travel Lawyer, Sydney
was in shock when the ‘unsinkable’ Titanic sank on her
maiden and final voyage in the early hours of 15 April 1912.
What went wrong, and what could have been done differently,
was the subject of a US Senate Inquiry instigated by Senator
William Alden Smith and a British Inquiry presided over by
Lord Mersey, the Wreck Commissioner. It was also the subject
of many private law suits.
I was very fortunate to be privy to a legal presentation on
The Sinking of R.M.S. Titanic by Joseph A. Kilbourn
from the New York law firm of Bigham Englar Jones & Houston,
who were the lawyers who acted for the cargo insurers
handling claims from the loss of the R.M.S. Titanic. The
presentation was drawn from the original legal files for the
Titanic law suits which are kept securely in its safe.
These are the six lessons the world has learned:
Lesson One – The bulkheads should be watertight
Bulkheads on a ship are like canisters – they are lined up
inside the hull, side by side, so that if water enters from
a breach of the hull, the bulkhead fills up with water, not
the whole hull. In this way, the ship maintains its
The Titanic had fifteen bulkheads, the tops of which
extended up above the waterline. The bulkheads were built to
comply with current maritime standards. The problem was that
the standards did not require the bulkheads to be capped. It
was like a canister without a lid.
After the collision with the iceberg, five of the bulkheads
on the starboard bow gradually filled with water. As they
filled, the ship listed and because the bulkheads were not
capped. The water slopped over the tops into the other
bulkheads. Soon the other bulkheads started to fill with
water and the ship sank ever more rapidly.
The Inquiries found that the main reason that the Titanic
sank was the fact that the bulkheads were not capped, and
therefore not watertight.
Lesson Two – The double hull could have been better
The Titanic had been designed with an outer hull, and with
an inner hull between 63 and 75 inches inside, to provide
extra protection if the outer hull were breached, such as by
grounding. The fact that the double hull extended up the
sides of the hull was the main reason why the Titanic was
considered by its owner to be ‘unsinkable’. Or as the owner
put it – the whole ship was a lifeboat.
The poor design lay in the fact that around the turbine and
engines, the inner hull had not been extended above the
waterline, to where it had been extended elsewhere on the
Once the ship started listing, and water filled the gap
between the double hull to the waterline, slopping over the
inner hull near the machinery space, where the pumps were
unable to contain the flooding.
Lesson Three – Not enough lifeboats
The Titanic was designed to carry 32 lifeboats, which could
have carried 2,160 passengers. There were 2,201 passengers
on board, and so 32 lifeboats would have almost been enough.
A lifeboat is attached to a davit, which consists of two
steel arms with ropes and pulleys to allow the lifeboat to
be lowered into the water. The davits on Titanic were Wehlin
double-acting davits - designed for two lifeboats per davit.
The owner of the Titanic, the White Star Line, chose to fit
one lifeboat per davit instead of two lifeboats per davit.
Therefore it carried 16 lifeboats, one for each of the 16
davits, plus four collapsible lifeboats, which meant that
there was capacity for 1,178 passengers. This complied with
current maritime standards. The standards were based on
tonnage, not numbers of passengers!
At the Inquiries, the question was asked – Why did you not
fit two lifeboats per davit? The official answer was that
maritime standards did not require it. But the unofficial
answer was that the extra lifeboats were not fitted because
they would have cluttered up the Boat deck – was this to
provide more room for the deckchairs on the Titanic to be
Lesson Four – Iceberg warnings should not be ignored
Although the Titanic took the winter route (or southern
track) across the Atlantic Ocean because it was freer of any
ice, it was still a route where icebergs had been sighted in
April. During the day of April 14, four separate ice
warnings were received from other ships warning of icebergs
within 5 miles of the track the Titanic was taking. Captain
Edward Smith heeded these warnings and steered a more
The last of these ice warnings was from the Californian
which was about 5 miles away at 10:00 pm, and was given
about an hour and a half before the accident occurred – ‘We
are stopped and surrounded by ice.’
This ice warning was infamously ignored by the radio
operator - it was not passed on to the bridge. The radio
operator was too busy sending personal messages for the
first class passengers – his reply was ‘Shut up. I’m too
Lesson Five – Full Speed can be dangerous
The official policy of the White Star Line was that in clear
weather, ships should be navigated at full speed, day and
night. This policy of sailing ‘at a fair clip’ could have
originated from the days when the White Star Line was
sailing clippers to Australia in the 1860s.
In any event, J Bruce Ismay, the managing director of the
White Star Line was on board, and he wanted to show that his
newest and most luxurious ship could cross the Atlantic
fast! His instructions to Captain Edward Smith were - in
clear weather, whether it be day or whether it be night,
there should be no reduction or need be no reduction in the
speed, although the master of the ship knows that he is in
the ice region.
The night of 14 April 1912 was clear, the seas were calm,
the stars were out, but there was no moon. The Titanic was
proceeding at full speed ahead at 22 knots, its maximum
speed. At 11:40 pm one of the lookouts in the crow’s nest
struck three blows on the gong, an accepted warning of
danger ahead. Despite turning the wheel ‘hard-a-starboard’
and telegraphing the engine room ‘Stop. Full speed astern.’
the Titanic could not avoid the iceberg less than a minute
The British Inquiry (somewhat unbelievably) exonerated
Captain Edward Smith (who admittedly had gone down with his
ship) but added - ‘What was a mistake in the case of the
‘Titanic’ would without doubt be negligence in any similar
case in the future.’
Lesson Six – Lifeboat drills are important
first and second class passengers had easy access to the
Boat deck by staircases and elevators. The third class
passengers had to take a more difficult route to reach the
Boat deck – they could take staircases to the C deck, and
then reach the Boat deck by ladders on the port and
starboard sides, or pass through emergency doors to a
passageway and then take stairs to the Boat deck.
There were no lifeboat drills held on the Titanic.
after midnight, Mr Thomas Andrews, the Managing Director of
Harland & Wolff, the builders of the Titanic reported to
Captain Smith that it was a mathematical certainty that the
ship would founder. The stewards were ordered to awaken each
passenger and to tell them to come to the Boat deck dressed
in a life jacket. Under order of ‘women and children first’
the lifeboats began to be filled and then lowered from 12:45
am until 2:05, by which time all 16 lifeboats and 2 of the 4
collapsible boats had been lowered. The lifeboats were just
over half filled when launched. Out of 1,178 places
available in the lifeboats only 706 were filled.
The lack of a lifeboat drill therefore had fatal
consequences – there was a lack of familiarity with
emergency procedures and with the access routes to the Boat
deck, accentuated by the fact that it has been estimated
that 500 of the passengers may not have been English
The Titanic disaster shocked the world into making passenger
ships safer. All of the lessons were heeded. Two years
afterwards, in 1914 the International Convention for the
Safety of Life at Sea was agreed.
Today, countries around the world have laws for safety on
shipping, and international conventions extend these laws to
sailing on the high seas.