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Jetstar has been fined a record NZ$2.25 million (just over AU$2 million) in New Zealand for misleading customers about flight compensation.
The low-cost carrier was sentenced at Auckland District Court on Monday on 20 charges of breaching the NZ Fair Trading Act in 2022 and 2023. It had faced a potential fine of around $2.5 million, with a 25 per cent uplift based on its size and financial position.
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Handing down the penalty, Judge Brooke Gibson noted he had discounted the final amount by 25 per cent for Jetstar’s early guilty plea and 10 per cent for having no previous offences in the country before applying the uplift.
Jetstar has refunded more than $1 million NZD to around 2,700 affected customers, who were incorrectly told there were caps and restrictions on compensation for delayed and cancelled flights within the airline’s control.
The carrier said it accepted the decision, and referred to a pre-sentencing statement last month saying it took full responsibility for the “frustration, stress and financial impact” it caused. The airline had acknowledged the conduct was “reckless”, but not deliberate.
“Over the past two years, we’ve reviewed thousands of past claims and contacted customers impacted by these errors to ensure they receive the compensation they’re entitled to,” the statement read.
“For anyone who still feels they may not have received the correct compensation for a past flight disruption in Aotearoa, please get in touch with us [via our website] so we can review your case.
“We’ve made significant changes to prevent this from happening again, including updating our website and communications so New Zealand customer rights are clear, improving training and strengthening our claims review process.
“When things don’t go to plan, our customers can have assurance they will receive the compensation they’re entitled to.”
Under NZ law, consumers impacted by delays or cancellations “within the airline’s control” are entitled to reimbursement for “reasonable costs” incurred as a result, including meals and accommodation as well as any other costs for the passenger to get to their destination, up to 10 times the ticket cost.
In a statement, Vanessa Horne, general manager for competition, fair trading and credit at the New Zealand Commerce Commission (NZCC), said Jetstar’s conduct was “serious, widespread and deserving of one of the biggest penalties ever imposed under the Fair Trading Act”.
“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,” she said.
“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.
“Airline travel is an essential service and given the lack of options in NZ, it’s crucial that airlines act fairly and responsibly.
“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.”
The carrier had last year offered a mea culpa to affected passengers, saying on its website that its ability to provide remedies was disrupted by pandemic issues.
