New Zealand set to take Jetstar to court over treatment of customers

New Zealand is taking Jetstar to court over allegations the Qantas subsidiary misled passengers about their refund entitlements.

Qantas subsidiary Jetstar is being prosecuted on either side of the Tasman over its refusal to refund or compensate customers in the event of cancelled or delayed flights.

New Zealand’s Commerce Commission is preparing to file an action against Jetstar in the Auckland District Court, alleging the low fares carrier misled consumers about their right to compensation, and likely denied legitimate claims.

The lawsuit comes after a class action was filed in the Federal Court of Victoria this month over Jetstar’s handling of Covid-19 travel credits, and failure to provide refunds to customers who were legally entitled to them.

Commerce Commission general manager of competition, fair trading and credit, Vanessa Horne, said Kiwi customers of Jetstar had rights under aviation law.

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

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

Ms Horne said that included delays or cancellations caused by staffing or mechanical issues.

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

In response to the New Zealand action, Jetstar issued an apology, saying they were “focused on making things right for customers and improving our communication and processes”.

“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,” said a statement posted on the Jetstar website.

“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 is feeling the heat from both sides of the Tasman with lawsuits in New Zealand and Victoria. Picture: Nigel Hallett

The Commerce Commission noted that Jetstar’s website allowed consumers to resubmit claims for compensation for reasonable costs from cancelled or delayed flights, which may have been incorrectly handled at the time.

“The commission will be filing charges in the Auckland District Court shortly, and so is unable to provide any further information at this time,” the commission added.

The lawsuit came just days after Jetstar announced several new routes to New Zealand, including the Gold Coast and Sydney to Hamilton and Gold Coast to Dunedin.

It’s a fresh blow to the Qantas Group, which agreed to pay a $100m penalty to the Australian Competition & Consumer Commission this year, plus over $20m in compensation to travellers for selling tickets on already cancelled flights over several months in 2022.

Qantas is also facing a class action over its handling of Covid-19 travel credits, which saw customers experience great difficulty trying to redeem credits for flights cancelled during the pandemic.

About $375m in travel credits remain unused, and Qantas last year agreed to axe the expiry date and appoint a dedicated call centre concierge to help customers use them.

Jetstar achieved a record profit in the 2024 financial year, with earnings before interest and tax climbing from $404m to $497m.