Decision to prosecute Freedom Air

Media Release

Issued 14 March 2002/21

Commerce Commission takes airline industry complaints seriously: decision to prosecute Freedom Air

The Commerce Commission is warning the airline industry to ensure its practices for advertising airfares do not breach the Fair Trading Act or face further prosecutions.

The warning to the industry follows a decision by the Commission to bring charges against South Pacific Air Charters Limited, trading as Freedom Air, for alleged breaches of the Fair Trading Act.

The Commission alleges that Freedom Air’s advertised airfares were misleading. In addition to the advertised airfares, passengers were required to pay costs in the form of Civil Aviation Authority (CAA) and insurance ‘levies’ which were either not disclosed or inadequately disclosed in advertising.

Also, the Commission alleges that the insurance “levy” was in fact an operational cost and that Freedom Air was inaccurately representing the nature of this cost.

This latest action by the Commission follows an earlier prosecution of Freedom Air in October 2000 for making false or misleading claims about the prices of its “Christmas airfare sale”.

Whilst the Commission’s allegations relate to Freedom Air, the Commission is concerned that other airlines might be advertising in a similar way.

“Other airlines might also be misrepresenting the costs of flights and the nature of insurance and other costs,” said Commission Chair John Belgrave.

“We are now investigating to see if this is a widespread practice or whether Freedom Air is the only airline operating in this way.”

“Consumers must be able to rely on the overall impression created by advertising in this industry. All important terms and conditions must be accurately and clearly explained.”

The Commission will take further action if it finds other airlines are advertising in a misleading manner.

ENDS

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