Air NZ's fare ads 'meant to deceive'

The only reason Air New Zealand did not include extra fees and charges in its "headline" airfare advertisements was to mislead customers, the Commerce Commission has told the Auckland District Court.

The airline is defending charges that it breached the Fair Trading Act when it advertised cheap airfares without properly showing extra fees, surcharges and add-ons.

It is facing 20 sample charges, after the commission says it broke the law in 355 newspaper advertisements between October 2001 and June 2004.

As the trial draws to an end, commission lawyer Todd Simmonds yesterday posed the question why, when the existence and amount of additional costs were known by the seller and these costs were mandatory, were they not included in the headline price?

"The only logical explanation for why they are not included, it is submitted, is because the seller wants to make the advertised price as attractive (ie, as low) to the consumer as possible," he said.

This rationale for Air NZ to separately disclose its price would not be achieved if consumers could readily ascertain what the actual cost was.

"Thus, the logic of the defendant's separate disclosure is, by definition, actually to mislead rather than to ensure that the price is fairly and accurately represented.

"It is so obvious - why else would the disclosure be made in this way?"

The advertising was about creating a false impression about prices, to the detriment of consumers.

Such conduct was "illegal and entirely objectionable", particularly given the size of the company and its standing as the national carrier.

It was "even more objectionable" that at the same time Air NZ was running the advertisements in local newspapers, it was using "all-inclusive" ads, that had extras included, in the Australian market.

"The defendant's advertising does not represent fair trading and nor is it even remotely fair dinkum."

Air NZ's lawyers will present their closing submissions to Judge Stan Thorburn today.