AirAsia warned over opt out pricing and processing fee

Media release

Issued 5 September 2016

AirAsia warned over opt out pricing and processing fee

Malaysian airline Air Asia X Service Pty Limited has agreed to end its preselection of checked baggage and change how it discloses its processing fee when selling flight tickets to New Zealand customers online.

The Commerce Commission believes that in preselecting luggage at an extra cost to the advertised flight price, and not properly disclosing a mandatory processing fee, AirAsia was likely to have misled consumers over the price of its services. The Commission has issued AirAsia with a formal warning.

AirAsia introduced flights from Auckland to the Gold Coast in March 2016. The Commission became aware that, in selling those flights, AirAsia was advertising a price that did not include a pre-selected checked baggage allowance. It was also charging a payment processing fee that was not avoidable for New Zealand consumers. The Commission wrote to AirAsia at that time advising it of these concerns.

AirAsia subsequently agreed to change its on-line booking process to sell checked baggage on an ‘opt in’ basis. It also now discloses the processing fee early in its booking process and has introduced an alternative payment method that enables customers to avoid the fee entirely. These changes were made in July 2016.

Chair Dr Mark Berry said AirAsia had cooperated fully with the Commission’s investigation and a warning was appropriate in this case.

“We have been proactive about tackling opt out pricing, with the travel industry a particular focus for us. We are pleased that AirAsia has moved to improve their pricing practices, including how they disclose their processing fee, after we contacted them with concerns when they re-entered the New Zealand market earlier this year,” Dr Berry said.

“Since we began investigating opt out pricing last year we have now seen seven companies put an end to this practice, which is great for consumers. We have made our position very clear on this issue and expect businesses to stick to an ‘opt in’ sales approach to avoid any possibility of breaching the Fair Trading Act.”

Last year the Commission called for all New Zealand businesses to end the use of opt out pricing, with Air New Zealand, House of Travel, Dash Tickets, Ticket Direct and Naked Bus all agreeing to do so. In March this year Jetstar gave court enforceable undertakings to the Commission ending its preselection of a range of services. The Commission does not have any further ongoing investigations into this issue at this time.

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