Commerce Commission to file charges against Jetstar over alleged misleading claims on compensation for flight delays and cancellations

The Commerce Commission is alleging Australian airline Jetstar has misled consumers about their rights to compensation when flights are delayed or canceled for reasons within Jetstar’s control. 

The consumer watchdog announced on Wednesday it will be filing charges in the Auckland District Court against Jetstar under the Fair Trading Act.

“In the Commission’s opinion, Jetstar likely made false or misleading statements to consumers about their rights in aviation law, in 2022 and 2023,” it said.

Vanessa Horne, the Commission’s General Manager of Competition, Fair Trading and Credit, said the Commission believes Jetstar’s communications not only “discouraged” consumers from seeking compensation they were entitled to but Jetstar likely denied legitimate claims.

“The Civil Aviation Act 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,” Horne said.

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

This includes delays or cancellations due to staffing or mechanical issues. 

The Commerce Commission said in these circumstances, consumers are entitled to reimbursement for reasonable costs caused by the delay.

This could include costs like meals, accommodation and other costs that consumers had to pay to get to their destination, up to 10 times the cost of the ticket. 

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 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.

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

The Commerce Commission said it encourages any consumers who think they may be eligible to visit Jetstar’s website as it allows consumers to resubmit claims for compensation for reasonable costs from canceled or delayed flights which may have been incorrectly handled at the time.

Consumer NZ said it welcomed the charges against Jetstar.

Consumer NZ Campaigns Manager Jessica Walker said the news followed Consumer NZ’s complaint to the Commission about Jetstar in 2022.

“We raised concerns that Jetstar was falsely claiming it wasn’t liable to cover costs, such as accommodation, meals, transfers and alternative travel arrangements, after flights were disrupted for reasons within the airline’s control,” she said.

“The Commission’s decision to file charges sends a strong signal to the airlines that they must do better, or face consequences. There's no doubt airlines are better off financially if they fail to communicate with passengers about their rights when flights are disrupted.”

Jetstar is known for being a low-cost airline and in NZ makes up one of the major domestic airlines, the other being the country’s biggest airline Air New Zealand. 

Jetstar is the third largest airline in Australia by domestic market share and is a wholly owned subsidiary of the Qantas Group.

Jetstar responds

In a statement, Jetstar said it had fully cooperated with the Commerce Commission as it conducted the investigation.

The airline was “deeply sorry” to have let its NZ customers down through errors made in assessing some compensation claims for disrupted flights in 2022 and 2023.

“Since becoming aware of this issue, we’ve been focused on making things right for our customers and improving our communication and processes,” the company said.

“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.”