The Commerce Commission (ComCom) is set to file charges in the Auckland District Court against Jetstar under the Fair Trading Act for allegedly misleading customers on their rights to compensation when flights were delayed or cancelled for reasons within Jetstar’s control. 

According to the commission the misleading statements occurred between 2022 and 2023. 

Vanessa Horne, the commission’s general manager of competition, said that communications from Jetstar to customers “likely discouraged them from seeking compensation”. 

“Airlines have a responsibility to not mislead consumers about their rights in the event of cancellations or delays,” Horne said. 

“The Civil Aviation Act (CAA) is clear that airlines have a responsibility to reimburse customers for loss caused by cancellations or delays on New Zealand domestic flights that are within the airline’s control.” 

The Commerce Commission alleges the airline made misleading statements regarding customer compensation for delayed or cancelled flights. New Zealand Herald photograph by George Heard 31 May 2024 

The commission believes that Jetstar likely denied legitimate claims to compensation over the period. 

Jetstar apologised to New Zealand customers, saying it made errors in assessing some compensation claims as its operations restarted following Covid-19. 

“Late last year, we began reviewing past claims and reaching out to impacted customers to ensure they are correctly reimbursed, and we are continuing to work through this as a priority,” Jetstar said. 

The airline has fully cooperated with the commission in its investigation and encouraged affected customers to contact the airline and have their cases reviewed. 

According to the Montreal Convention, consumers are entitled to reimbursements for costs incurred from delays and cancellations unless the airlines did all they could reasonably do to prevent the disruption. 

“The Montreal Convention sets out consumers’ rights when travelling internationally, and consumers are entitled to reimbursements for costs incurred from delays and cancellations unless the airlines did all they could reasonably do to prevent the disruption,” Horne said. 

For international flights consumers are entitled to the reasonable costs arising from the delay, which could include replacement flights, accommodation, and food, up to a maximum set under the Convention, currently around $11,000. 

“The Commerce Commission expects large businesses to take their responsibilities under the law seriously – they must honour their obligations to consumers,” she added. 

Consumer NZ campaigns manager Jessica Walker welcomed the news following its complaint to the commission in October 2022. 

“After receiving numerous complaints from disrupted customers, we told the commission we thought Jetstar was misleading passengers about their rights under the Civil Aviation Act,” Walker said. 

“Airlines are not required to tell people about their rights, and this has led to a situation where travellers don’t understand their rights - or even worse are misled about their rights. The unfortunate thing about this situation is passengers often miss out on claiming back costs they’re entitled to,” Walker added. 

She said the action from the commission sent a strong message to the airline sector that they will face consequences for poor practice. 

She also hopes new amendments to the CAA that come into force in April 2025 will require airlines to publicly provide passengers with information on their rights. 

Australian Covid class action 

Last month, Jetstar was hit with a class action over travel vouchers issued to hundreds of thousands of customers for flights cancelled at the height of the Covid-19 pandemic. 

The lawsuit filed in the Australian Federal Court claimed the airline was legally obliged to refund tickets and is pushing for the money to be returned directly to customers with interest. 

“The right thing for Jetstar to do when it cancelled all those flights was to return its customers’ money without delay,” Echo Law Partner Andrew Paull said. 

“Jetstar customers were pushed into holding hundreds of millions of dollars in restricted travel credits, even though this wasn’t what those customers had agreed to as part of the airline’s terms and conditions.” 

It claims the contract passengers had with Jetstar was “frustrated” under Australian law, meaning the agreements were terminated and customers had an automatic right to recover money paid. 

Any passengers who had a Jetstar flight cancelled from 2020-22 can register interest in the class action, even if they used their travel voucher. 

Echo Law has also launched a different class action against Qantas, which owns Jetstar, over its use of travel credits based on separate legal grounds. 

Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.