Freedom Air lands in watchdog's bad books

By Phil Boeyen, ShareChat Business News Editor

Thursday 14th March 2002

Air New Zealand's (NZSE: AIR) discount carrier Freedom Air is in hot water again with the Commerce Commission for the way it advertises its fares.

The Commission is planning to prosecute the airline for allegedly misleading advertising which failed to properly disclose the full amount of the fares being promoted.

"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," the Commission says.

"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 regulatory action follows a prosecution of Freedom Air in October 2000 for making false or misleading claims about the prices of its "Christmas airfare sale". That breach cost the airline $4,000.

The Commerce Commission says while its latest allegations relate to Freedom Air, it 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," says chairman 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."

Mr Belgrave says consumers must be able to rely on the overall impression created by advertising in the travel industry and all important terms and conditions must be accurately and clearly explained.

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

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