Flight Centre jettisons its "lowest airfares guaranteed" slogan

By Philippa Hore.

Key Points:
When the ACCC thinks consumers have been misled by an organisation's conduct, it can require very detailed and specific actions to remedy that conduct.

A snappy slogan might help to bring customers in the door but, as one Australian business has recently discovered, it can also mean an investigation by the ACCC, resulting in a detailed program of corrective advertising and court-enforceable undertakings.

Flight Centre is well known as one of Australia's largest travel agencies, specialising in the sale of domestic and international flight tickets. For 17 years, it has promoted its business using the slogan "Lowest Airfares Guaranteed". Part of this selling point is Flight Centre's "global buying power":

"Flight Centre is a global company, negotiating airfares on a global basis. With our bulk buying power, we negotiate better airfare deals than other travel retailers and in turn offer you the advantage of these discounts."

Investigation by the ACCC

The Australian Competition and Consumer Commission investigated Flight Centre's claims after receiving a number of complaints from consumers about the "Lowest Airfares Guaranteed" slogan. As part of the investigation, the ACCC conducted its own limited airfares survey, comparing prices from Flight Centre and competing agencies.

The ACCC considered that Flight Centre's use of the "Lowest Airfares Guaranteed" slogan was misleading or deceptive, breaching the Trade Practices Act, because it suggested its prices were the lowest prices available when they weren't always so. ACCC Chairman Graeme Samuel said that "The ACCC had serious concerns that customers may have been misled by Flight Centre's slogan, which may have led them to decide not to 'shop around' for lower prices from competing agencies."

The ACCC also considered that the use of the Global Buying Power statement by Flight Centre was misleading or deceptive. It found that Flight Centre does not in fact have global buying power, as it does not generally buy airfares in bulk. Instead, it books airfares for customers on an individual basis.

Voluntary undertaking by Flight Centre

As a result of the ACCC's investigation, Flight Centre provided the ACCC with a voluntary, court-enforceable undertaking, in which it:

• accepted that some consumers may have been mislead by the "Lowest Airfares Guaranteed" slogan;
• agreed to stop using the "Lowest Airfares Guaranteed" slogan in any of its advertising and promotional materials in Australia for five years;
• accepted that some consumers may have been mislead by the Global Buying Power statement;
• agreed not to use the Global Buying Power Statement in the future without giving notice to the ACCC (in order to allow the ACCC to confirm whether the statement is accurate before Flight Centre uses it);
• agreed to publish a total of 44 corrective notices in 11 major newspapers; and
• agreed to display A3 sized corrective posters in the front window of each of its 500 plus retail outlets continuously for four weeks.

The devil is in the detail

The undertakings provided by Flight Centre in relation to corrective advertising are extremely specific and illustrate just how detailed the ACCC's requirements can be when it considers that consumers have been misled by an organisation's conduct. For example, the undertakings specify:

• the content of the notice that Flight Centre must print in newspapers (which includes the statement "Flight Centre recognises that some consumers may have misunderstood the meaning of the 'Lowest Airfares Guaranteed' slogan and has commenced use of a new advertising slogan to clarify the meaning of its price guarantee");
• the 11 newspapers in which the corrective notice must be printed (including the Australian, the Age, the Sydney Morning Herald, the Canberra Times and the Courier-Mail);
• the size of the corrective notice (260mm high and 3 columns wide);
• the timeframe over which the corrective notices must be published (on four separate occasions over a four week period, two of which must be in the weekend editions of each of the relevant newspapers);
• the position in which the corrective notice must appear (the notice must be placed on pages 1, 3, 5 or 7 or, if this is not possible due to advertising space availability, on pages 2, 4, 6 or 8 or, if this is not possible, on the first available page following page 8).

The undertaking also specifies the content of the poster to be displayed in the front window of all Flight Centre stores (it is the same content as the corrective advertisement), as well as the size of the poster (A3) and the timeframe over which the poster is to be displayed (four weeks).

Clearly, a corrective campaign of this magnitude would be a public relations nightmare for any business.

Price guarantees

In the ACCC's media release about this case, Graeme Samuel warned

"A claim that a trader guarantees to offer the lowest price in the marketplace for a particular good or service is a very powerful device. However with such claims comes a heavy responsibility as traders must ensure that they can honour their guarantee in every case."

Mr Samuel also warned that the ACCC will be keeping a close eye on the travel industry and its advertising practices.

Where to from here?

Flight Centre has now introduced a new slogan "PRICE BEAT GUARANTEE - bring us a competitor's airfare and if it's available, WE WILL BEAT IT". In a statement to the Australian Stock Exchange last week, Flight Centre's company secretary Greg Pringle said "We have a new simpler slogan and will continue to beat any competitor's quoted airfare price".

It remains to be seen whether the new "simpler" slogan, with its "if it's available" qualification, will take off.

For further information, please contact Philippa Hore.