Commerce Commission seeks ‘substantial’ fine for Jetstar

Thursday, 21 August 2025

Jetstar apologised last year for failures to adequately compensate some passengers.

Jetstar should face a “substantial penalty” after pleading guilty to misleading customers over their rights to compensation for delayed and cancelled flights, the Commerce Commission said at the District Court in Auckland on Thursday.

Counsel for the commission Jacob Barry said the starting point for sentencing should be a fine of $2.5 million with discounts of 25% for an early guilty plea, and 10% for its cooperation with the commission’s behaviour.

However, the commission argued for Judge Brooke Gibson to take into account what it called Jetstar’s “reckless” behaviour, and the airline’s large size, which it said justified an uplift of 25% in the penalty Jetstar should face, leaving a “net” 10% sentence discount.

Judge Gibson reserved his decision.

The court heard that Jetstar was a large, well-resourced business, whose misleading statements affected 2692 customers. The airline had made remediation payments just short of $1.4m. Jetstar paid compensation due to customers it could not trace to a children’s charity instead.

The commission said the airline should have been on notice since 2015 that its compensation policies and procedures were misleading, many coming after the airline suffered significant disruptions during the Covid pandemic.

Barry said in 2015, Jetstar was given guidance in New Zealand by the commission. In 2018, Australian regulators took action against the airline in Australia over similar conduct. In 2022, Consumer NZ complained to the commission.

But he told the court that Jetstar’s “poor” policies and procedures in New Zealand continued until 2024.

Jetstar’s lawyer, Joe Edwards, said the airline had made mistakes, and accepted its behaviour was reckless, but said: “It was never its intention to break the Fair Trading Act and mislead customers.”

He said senior executives had flown from Australia to be in the court to demonstrate the seriousness with with they viewed their errors, and the remorse they felt.

Systems had been put in place to make sure it “never happened again”, Edwards said.

It had hired a team to review 55,000 individual interactions with customers, and identified anyone affected by its misleading conduct.

Edwards said Jetstar accepted the commission’s starting point for sentencing, and its 25% uplift for Jetstar’s size, but argued that Jetstar’s remorse, early guilty pleas, remediation and systems changes, merited a reduction in the fine it should face.

The airline expected an adverse impact from bad publicity from the case.

The Commerce Commission said Jetstar’s conduct had been “reckless”.

“There’s not much more they could have done since they became aware of the offending,” Edwards said.

The Commerce Commission filed the charges against the airline last year, alleging it misled consumers about their rights to compensation when flights were delayed or cancelled for reasons within Jetstar’s control.

The commission’s general manager for competition, fair trading, and credit, Vanessa Horne, said at the time that consumers had rights under aviation law, and the commission believed Jetstar’s communications likely discouraged consumers from seeking compensation they were entitled to, and that Jetstar likely denied legitimate claims.

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

In the same month, Jetstar apologised, saying: “We’re deeply sorry to have let our New Zealand customers down by errors made in assessing some compensation claims for disrupted flights in 2022 and 2023, as our operations restarted following Covid.

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

Jetstar reiterated those sentiments in a statement released today.

Representatives for Jetstar were at the District Court in Auckland.

The Ministry of Transport’s June airline domestic flight reliability report said Air New Zealand’s cancellation rate for the month was 2.5% and Jetstar’s was 0.9%, though Jetstar’s cancellation rate during the month was 1.4% of flights on the key route between Wellington and Auckland.

Jetstar’s figures showed its domestic reliability in July was 98.3%, with 1.7% of its scheduled flights being cancelled.

“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.

This included delays or cancellations that are due to staffing or mechanical issues.

Jetstar has improved its flight cancellation rate.

Horne said consumers were entitled to reimbursement for reasonable costs caused by such delays, which could include the cost of meals, accommodation, and other costs consumers had to pay to get to their destination. Compensation was up to 10 times the cost of the ticket.

The Montreal Convention sets out consumers’ rights when travelling internationally, and consumers were 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 were 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.