Jetstar NZ has been fined $2.25 million in a “landmark case” for misleading customers over their compensation rights when flights are delayed or cancelled.
The reserved decision was delivered in the Auckland District Court this morning by Judge Brooke Gibson in what’s been described as “one of the biggest penalties ever imposed” under the Fair Trading Act.
Around 2700 passengers have already been compensated, more than $1 million all up, for the offending over 2022 and 2023, relating to flight delays and cancellations.
The airline faced 20 charges involving misleading statements about compensation for delayed or cancelled flights, (Source: 1News)
Jetstar NZ has apologised and acknowledged its conduct was reckless but not deliberate. It’s also donated $860,000 to an unnamed children’s charity.
The Commerce Commission alleged Jetstar misled consumers about their rights under the Civil Aviation Act to compensation and their rights to make a claim in the first place.
“Jetstar’s conduct was serious, widespread and deserving of one of the biggest penalties ever imposed under the Fair Trading Act,” spokesperson Vanessa Horne said.
“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 it was disappointing that an airline promoting itself as low cost left thousands of Kiwis “out of pocket after their claims were unfairly denied, especially when people often had to spend extra on last-minute flights and accommodation.”
The airline’s breaches of the law were related to delays or cancellations within the airline’s control, which include mechanical issues or staff sickness.
The morning’s headlines in 90 seconds, including a cash boost for regional airlines, sellers re-enter the housing market, and Donald Trump’s social media fury. (Source: 1News)
When a flight is cancelled for reasons within an airline’s control, consumers are entitled to reimbursement for reasonable costs caused by the delay or cancellation.
This could include the cost of meals, accommodation, and other costs consumers had to pay to get to their destination, up to 10 times the cost of the ticket, according to the Commerce Commission.
In a statement issued before sentencing, the airline said it was “deeply sorry for letting our New Zealand customers down”.
Consumer NZ chief executive Jon Duffy said it was a “landmark case”.
“A $2.25 million penalty sends a clear message that airlines cannot mislead passengers and expect to get away with it.”
Duffy urged the Government to adopt rules that would require airlines to communicate passengers’ rights more clearly during disruption.
“We need rules that protect travellers and ensure fair treatment. Without that, airlines profit from passengers’ confusion. There should be no place for that kind of behaviour in a competitive aviation market.”
