This is one of the biggest penalties under Fair Trading Act, Commerce Commission shares
Commerce Commission New Zealand has announced that Jetstar is dealing with a $2.25m penalty for breaching the Fair Trading Act 1986 by misleading consumers regarding their compensation rights when reasons within its control delayed or cancelled flights.
“The Commission's action has prompted Jetstar to put money back in the pockets of affected consumers and, crucially, secured a record penalty, which should serve as a strong deterrent to other large businesses,” said Vanessa Horne – the commission’s general manager for competition, fair trading, and credit – in a news release.
According to the commission, after its enforcement action, Jetstar has remediated over 2,600 impacted passengers and paid them more than $1,039,300 for misleading claims made during the charge period between 1 January 2022 and 22 March 2024.
“Jetstar’s conduct was serious, widespread and deserving of one of the biggest penalties ever imposed under the Fair Trading Act,” Horne said in the news release.
She lamented that an airline focusing its marketing on its low cost had left thousands of customers out of pocket after unfairly rejecting their claims, especially when consumers often have to pay a premium on last-minute flights and accommodation.
“Our investigation found that the misleading practices were the result of embedded shortcomings in Jetstar’s internal policies and instructions, which enabled staff to decline legitimate claims to compensation,” Horne said.
The news release noted that Jetstar is one of New Zealand’s biggest airlines and a wholly-owned subsidiary of the Qantas Group.
Before the charge period, the Commerce Commission gave Jetstar compliance advice for similar alleged acts and misleading consumers regarding their rights under the Civil Aviation Act 1990.
The commission determined that Jetstar misled tens of thousands of customers about their Civil Aviation Act rights to receive compensation and rights to commence a claim.
The news release said the Civil Aviation Act clearly holds airlines responsible for reimbursing customers for reasonable costs – including meal and accommodation expenses paid to reach the destination – caused by cancellations or delays in domestic flights due to staffing or mechanical issues and other reasons within the airline’s control.
The news release noted that reasonable costs were limited to up to 10 times the ticket cost.
According to the commission, Jetstar should have accepted responsibility and compensated impacted customers in situations such as those involving engineering problems, internal IT outages, and staffing challenges.
“Airline travel is an essential service and given the lack of options in NZ, it's crucial that airlines act fairly and responsibly,” Horne said in the commission’s news release.
“It can be incredibly stressful having your travel plans cancelled in these situations and it’s essential that transport providers give consumers clear and accurate information about their rights if delays and cancellations happen,” she added.
