Flight Centre tried to fix prices, court told
FLIGHT CENTRE tried to induce airlines to fix their prices so it could continue to honour its lowest-price guarantee without losing money, a court has heard.
The travel agency is facing allegations of price fixing by Australia's competition watchdog in the Federal Court in Brisbane.
The Australian Competition and Consumer Commission alleges Flight Centre attempted to induce three airlines to enter into price-fixing arrangements so it could maintain its commissions.
The commission claims that on six occasions between 2005 and 2009, Flight Centre tried to persuade Singapore Airlines, Malaysian Airlines and Emirates to agree to stop directly offering and booking their international airfares - including over the internet - at prices less than what Flight Centre offered.
On the first day of the trial yesterday, the court heard Flight Centre had a ''price beat policy'' that states if a customer finds a cheaper airfare, the travel agent will beat it by $1 and give the customer a $20 voucher.
The barrister acting on behalf of the ACCC, Keith Wilson, SC, said the policy created problems for Flight Centre when airlines sold tickets directly to the public at low prices. It meant Flight Centre was required to match the fare and effectively forfeit the 5 to 9 per cent commission that normally adds to the cost of airfares it sells to the public.
In his opening submission, Mr Wilson said Flight Centre sought to address the problem by having the three airlines agree to charge a direct-to-the-public price that was equal to its marked-up price.
Mr Wilson tendered an email that Flight Centre sent to Emirates in August 2005. The email requested the airline use the same price as Flight Centre, stating the travel agent wanted ''a piece of the action''. The hearing continues.