Freedom Air fined $10,000

Freedom Air not freely disclosing full cost of airfares - fined $10,000

South Pacific Charters Limited, trading as Freedom Air International, was fined $10,000 including costs in the Auckland District Court last Friday, having pleaded guilty to eight breaches of the Fair Trading Act in advertising the cost of airfares.

The Commerce Commission laid the charges against Freedom Air following an investigation into the company’s newspaper and website advertising which failed to disclose upfront the full cost of airfares to consumers.

Director of Fair Trading Deborah Battell said that the Commission has been concerned about price advertising in the travel industry since companies began separating out insurance and CAA levies following the events of September 11 last year.

“When we brought the charges against Freedom Air in March, we put out a warning to the industry raising our concerns about the misrepresentation of airfare prices and the nature of insurance and other costs in the industry,” she said.

“We are now close to finalising investigations into other airline companies for similar breaches.”

In sentencing, Judge Kiernan said that given Freedom Air’s previous record of offending, it was significant that the company was before the Courts again.

“If reasonable penalties are not imposed, the profits outweigh the fines,” she said.

Background

Four of the charges laid against Freedom Air related to newspaper advertising of its national airfares in the Dominion and Evening Post which failed to disclose an additional Civil Aviation Authority (CAA) levy as part of the cost.

The other charges related to advertising on Freedom Air’s website, where the CAA levy and an insurance cost were only displayed on a separate and subsequent terms and conditions page. In addition, Freedom Air claimed on its terms and conditions page that it was “obliged” or “required” to collect an insurance levy when the cost was not imposed by any regulatory body and is a normal operating cost for all airlines.

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Freedom Air was fined $4,000 in the Dunedin District Court in October 2000 for making false or misleading claims about the prices of its Christmas airfare sale.

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