Most airlines offer a variety of paid extras which can be added onto the total price of a flight. Baggage allowances, seat selection and insurance are standard – Air New Zealand also has a carbon offsetting option. Along with other businesses such as House of Travel, Dash Tickets, Ticket Direct and Naked Bus, Air New Zealand agreed to stop preselecting these extras last year, removing the likelihood that unobservant customers will fail to uncheck the selected extras and get caught out.
Jetstar “declined to change its approach” at the time but after an investigation, the Commerce Commission revealed it was prepared to take the case to court. It has given Jetstar a formal warning, details of which can be found here.
Consumer NZ has also put pressure on Jetstar for its pre-selected pricing. It launched its ‘Ditch the Ticks’ campaign in May last year. Sister organisation Choice in Australia has campaigned alongside it for regulators to take action.
In a 2015 opinion piece, Consumer NZ chief executive Sue Chetwin described the process she went through as she booked a cheap Jetstar flight with carry-on luggage only. She had to de-select five optional extras as she worked her way through the “maze”.
“It took a truly canny consumer to make their way through a Jetstar booking without having additional charges appear on the fare. On a return flight from Wellington to Auckland, the service charges including pre-selected insurance, seats and baggage, could add more than $40 to the fare,” she says.
Jetstar has this week signed a formal agreement as part of an out-of-court negotiated settlement. In this settlement, it has promised to end the preselection of opt-out services on its website by April 30. The agreement also prevents it from re-introducing the charges.
Commerce Commission chair Dr Mark Berry this morning welcomed its change of tack.
“It is pleasing Jetstar has now changed its stance and agreed to stop preselecting optional services on its website, avoiding the need for costly and time-consuming litigation,” he says. “The Commission has made its position on this issue very clear and traders can be assured we will take enforcement action to stop this type of conduct in the future.”
Berry says companies should not make “unsolicited purchasing decisions” on behalf of consumers. He advised that vendors should stick to an opt-in sales approach which would avoid any possibility of breaching the Fair Trading Act.