Watchdog questions Freedom Air's advertising

By DANIEL RIORDAN aviation writer

The Commerce Commission is taking Air New Zealand's discount arm, Freedom Air, to court for misleading advertising.

The commission says that in addition to its advertised fares Freedom required passengers to pay Civil Aviation Authority and insurance "levies" that were either not disclosed or were inadequately disclosed.

It alleges that the insurance "levy" was an operational cost that Freedom inaccurately represented to its customers.

Freedom stopped running the advertisements in October, but the commission can prosecute retrospectively.

It is looking to see if the practice has been used by other airlines.

"Consumers must be able to rely on the overall impression created by advertising in this industry," said commission chairman John Belgrave. "All important terms and conditions must be accurately and clearly explained."

Freedom will face at least three charges under the Fair Trading Act, each with a maximum fine of $100,000.

Commission lawyers are still deciding how many charges to lay.

Freedom issued a statement in response saying: "This is an issue that the airline is taking very seriously. We have co-operated fully with the Commerce Commission's investigation and intend to defend the case.

"It would be inappropriate to offer any further comment at this stage."

Freedom was prosecuted by the commission in October 2000 for its claims about the prices of its "Christmas airfare sale". It was fined $4000.

A Freedom advertisement run by the Herald last October for domestic flights had the footnote "fares are exclusive of a per sector insurance levy and CAA levy".

The footnote to an advertisement in Monday's Herald was more forthcoming: "An insurance levy of $9 each sector of your trip, and a domestic passenger levy of $2.15 per trip (being a one-way same day journey) is payable in addition to the ticket price".

On international flights, Freedom charges an $8 insurance levy.

Freedom's parent, Air New Zealand, included the Aviation Authority charge of $2.15 per flight in its ticket price until November, when it started charging it as an add-on.

Air New Zealand's website calls its $8 insurance charge "a war risk insurance premium levy" introduced after September 11.

As recently as last month, it described the extra charge as a travel tax, implying the money was going to the Government.

But the Government's security tax of $2.80 a passenger will not be introduced until next month.

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