Air New Zealand adverts misleading: Court

Release No. 63, Issued 24 November 2005

Air New Zealand has been found guilty of breaching the Fair Trading Act by misleading customers about the real price of its airfares.

The Commerce Commission brought the case against Air New Zealand after receiving complaints that customers were unable to fly for the prices advertised by Air New Zealand because extra mandatory charges were being added to the advertised price.

Of 20 sample charges laid by the Commerce Commission in the Auckland District Court, Judge Thorburn found today that 14 had been proved.

In some advertisements the price was misleading because extra charges were not properly disclosed, in others, normal operating costs that should have been included in the price were disguised as extra charges.

The findings with respect to the 20 sample charges suggest that the Commission is likely to succeed on approximately 300 of a total of 342 charges, which are expected to be resolved at the next stage of the proceedings.

Importantly, the Court also found that fuel costs are part of the airline’s operating costs and must be included in the price of airfares. The advertisement in which fuel costs were charged separately "smarts most unpalatably of "sharp" and unacceptable practice," Judge Thorburn said.

"Consumers are entitled to rely on the claims they see in advertising, and claims about prices have a huge impact on consumer behaviour," said Commerce Commission Chair Paula Rebstock.

"Businesses have been put on notice that they must fairly and clearly show the true cost of what they are selling."

"The judgement leaves no room for doubt that operating costs, such as the cost of fuel, must be included in prices, not charged as extras, and any additional costs must be transparently disclosed."

ENDS

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