Jetstar ‘deserving’ of court fine after misleading NZ customers on compensation rights
Jetstar has been hit with one of the biggest penalties in New Zealand consumer law history after the airline ‘recklessly’ denied legitimate customer claims.
The high-flying Jetstar subsidiary of the Qantas Group has been hit with a hefty penalty after the low-cost carrier admitted misleading New Zealand customers about compensation entitlements for delayed and cancelled flights.
The Auckland District Court imposed a fine of $2.25m after Jetstar pleaded guilty to 20 charges brought by the New Zealand Commerce Commission late last year.
An investigation undertaken by the commission found Jetstar’s communications had discouraged consumers from seeking compensation they were entitled to, and that Jetstar “likely denied legitimate claims” in 2022 and 2023. The conduct continued up to March 2024.
Under New Zealand’s Civil Aviation Act, airlines have a responsibility to reimburse customers for reasonable costs caused by cancellations or delays on domestic flights that are within the carrier’s control, such as mechanical and staffing issues.
The court heard Jetstar’s offending was not just “careless, but reckless”, and continued in the face of warnings from the Commerce Commission. Jetstar was the standout performer for the Qantas Group in the 2025 financial year, growing earnings by 54 per cent to $769m.
On Monday, Commerce Commission general manager of competition, fair trading and credit Vanessa Horne said the airline’s conduct was “deserving of one of the biggest penalties ever imposed under the Fair Trading Act”.
“It is disappointing that an airline promoting itself as ‘low cost’ has acted in a way that resulted in thousands of consumers being left out of pocket after their claims were unfairly denied, especially when people often had to spend extra on last-minute flights and accommodation,” Ms Horne said.
“Our investigation found that the misleading practices were the result of embedded shortcomings in Jetstar’s internal policies and instructions, which enabled staff to decline legitimate claims to compensation.”
Since the charges were laid, Jetstar had refunded more than $NZ1m to 2692 customers, which was noted by judge Brooke Gibson.
“I accept that there is little more that Jetstar can now be expected to do to remedy the matter and remediate the harm done to customers than that which they have already undertaken,” Justice Gibson said.
Jetstar also issued a written apology, taking full responsibility for its “mistakes”.
“Over the past two years, we’ve reviewed thousands of past claims and contacted customers impacted by these errors to ensure they receive the compensation they’re entitled to,” it said in a statement.
“We’ve made significant changes to prevent this from happening again, including updating our website and communications so New Zealand customer rights are clear, improving training and strengthening our claims review process.”
The statement added that “customers can be assured they will receive the compensation they’re entitled to when things don’t go to plan”.
New Zealand’s protections for airline customers are significantly stronger than Australia’s where a “charter of rights” is being developed to try to improve the position of passengers in the event of delays and cancellations.
Both the Qantas and Virgin Australia groups have argued against European-style compensation schemes, under which travellers are automatically entitled to set payments in recognition of disruption and personal cost.
The federal government’s proposed customer charter of rights stops some way short of that, but a new aviation ombudsman scheme is expected to have the power to investigate complaints when it is finalised next year.
A Jetstar spokesman said “we accept the court’s decision” in response to the fine handed down by Justice Gibson on Monday.
It is the latest in a series of big penalties imposed on the Qantas Group, including a $90m fine for unlawful outsourcing of ground handling workers, and a $120m settlement with the Australian Competition & Consumer Commission for selling tickets on cancelled flights.
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