Flight Centre's Win For All Agents
Well over three years ago, in March 2012, when the Australian Competition and Consumer Commission (ACCC) hauled Flight Centre before the Federal Court and accused the company of price fixing, I wrote: “The principle at stake is one that affects all travel agencies”.
As travelBulletin reported at the time: “At the core of the ACCC’s prosecution of Flight Centre … is an issue that causes angst for travel agents around Australia – airline websites offering fares direct to the public at prices that undercut fares available through their agents”.
Of course, airlines have always been free to offer the public deals unavailable through agency channels.
But are agents entitled to negotiate preferred supplier deals that require airlines to give them access to all such deals? As I put it at the time: “Does a travel agency which has invested in premises, people, technology and marketing to provide an airfare distribution network have the right to insist on access to all of an airline’s fares when it negotiates a deal for preferred sales through its network?”
No, said the ACCC. The competition regulator said this amounted to retail price maintenance.
Agents would not agree. They would say they just want a level playing field. But this was a legal issue. As I wrote at the time: “Learned lawyers and judges will decide the outcome of the case”.
The lawyers have taken their time – more than three years – and at one stage things looked grim for Flight Centre. In December 2013, the Court found against the company and fined it $11 million.
But on July 31, the Full Court of the Federal Court of Australia overturned the initial judgement and found against the ACCC. The Full Court ruled that the $11 million fine, plus interest, be refunded to Flight Centre and it ordered the ACCC to pay the company’s legal costs.
Flight Centre managing director Graham Turner summed up the impact of the decision with the statement that “it is a logical and natural business request” for an agent to ask airlines for “reasonable access to all deals that they release to the market”.
Apart from anything else, Turner pointed out, such an approach ensures that agents’ customers, comprising around 80 per cent of people who purchase international air fares, are not disadvantaged.
Indeed. And while agents will no doubt continue to experience the frustration of airlines and other suppliers using their websites to undercut agents’ prices, at least Flight Centre has established that agents can attempt to negotiate a level playing field.