Shares in online ticketing platform Trainline (LON:TRN) slipped on news of a CMA (Competition and Markets Authority) probe. The regulator is investigating ‘suspected infringements of consumer law’ over Trainline’s presentation of mandatory fees for train and coach tickets.
CMA probing pricing
The CMA will examine whether mandatory fees are included in the total price customers see at the start of the ticket-buying process. Trainline is one of three companies, alongside Virgin Atlantic and Red Driving School, being investigated for ‘drip pricing’.
All three firms were previously put on notice that they could be investigated for their pricing behaviour. The CMA now says concerns remain around their pricing practices and consumers could be in line for compensation.
‘Drip pricing’ is where mandatory charges are separated from the headline price and added later in the buying process. The CMA argues the practice is misleading for customers, leaving them facing unexpected costs. It also argues ‘drip pricing’ can affect competition between businesses as a lower headline price can attract more customers.
Trainline responded to the announcement by saying it was committed to delivering value to customers by providing a transparent booking experience with clear pricing. It claimed this was refelcted in its 4.9 star app rating.
We’ve probably all used booking apps, only to find out the final price is higher than the headline price. In the case of Trainline, mandatory fees are small, ranging from 59p to £2.79 on trains and £1.50 on coaches.
However, they aren’t included in the upfront prices shown to customers buying tickets in advance on the Trainline website. You only have to multiply the fees by the millions of tickets sold each week to know Trainline is coining it. Not only that, presenting a lower headline price is a way of attracting customers away from its competitors.
At this stage, investors shouldn’t assume Trainline has infringed any consumer protection laws. However, the fact it was sent an advisory letter putting them on notice, and still the CMA feels the need to investigate, isn’t a great look.
