Legal Update - Commerce Commission to File Charges Against Jetstar

The Commerce Commission has announced charges are coming down the pike for the famously ‘low fare’ airline, Jetstar, for misleading statements made in 2022 and 2023.

The charges under the Fair Trading Act 1986 (FTA) allege the airline misled consumers about their compensation rights in aviation law when flights were delayed or cancelled.

Under aviation laws, airline carriers are obliged to compensate passengers for loss caused by delays or cancellations on New Zealand domestic and international flights for reasons within the carrier’s control.

This could include reasons such as mechanical issues or staffing.

The FTA prohibits people in trade from engaging in misleading or deceptive conduct, including making false or misleading statements to consumers (see in particular ss 9 and 11).

The Commission alleges what Jetstar communicated to their customers likely discouraged them from seeking compensation they were entitled to, and that Jetstar likely denied legitimate claims.

Sometimes businesses can assert that legislation doesn’t apply to them, also known as ‘contracting out’, but this is expressly prohibited by the FTA when it comes to consumers because the act endeavours to protect consumers’ interests.

The prohibition on false or misleading representations does not just capture written statements, it also includes:
- impressions given in pictures, advertisements, or other promotional material;
- statements made over the phone;
- leaving out information; and
- factually incorrect or inaccurate statements (including about the standard, quality or kind of good or service).

When flights are delayed or cancelled for reasons in the carrier’s control, domestic and international bound passengers are entitled to reimbursement for reasonable costs caused by the delay.

Compensation could go towards covering the cost of meals, accommodation, and other costs to get to the destination.

For domestic travelers, reimbursement can be up to 10 times the cost of the ticket and for international jetsetters, a maximum is set under the Montreal Convention, currently at around $11,000.

Breaches of the FTA can amount to an offence. The maximum fine for a body corporate found guilty of breaching s 11 of the FTA is a significant NZ$600,000.