Jetstar has agreed to drop the use of pre-selected 'opt-out' services when selling airline tickets online after the Commerce Commission concluded there were grounds to prosecute the Qantas Airways subsidiary under the Fair Trading Act.

The airline had held out as other companies fell into line with the regulator last year, including rival Air New Zealand, House of Travel, Dash Tickets, Ticket Direct and Naked Bus. Consumer NZ had also campaigned to end the practice. The use of pre-ticked boxes in online booking forms added extras that some travellers may not have wanted, such as insurance.

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Having concluded its investigation into Jetstar, the commission was prepared to take court proceedings, chair Mark Berry said in a statement. Jetstar has been issued with a formal warning over its behaviour.

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"It is pleasing Jetstar has now changed its stance and agreed to stop preselecting optional services on its website, avoiding the need for costly and time-consuming litigation," he said. "The commission has made its position on this issue very clear and traders can be assured we will take enforcement action to stop this type of conduct in the future."

Under the formal agreement signed this week, Jetstar has made court enforceable undertakings to change its conduct on its website by April 30 and not to re-introduce opt-out charges in future, he said.

Consumer NZ last year said Jetstar's booking process meant travel insurance, seats and baggage were preselected as extras, which would have added $42.95 to the cost of a return flight from Auckland to Wellington, in addition to credit card charges.

A screen grab of Jetstar's website showing the automatically selected insurance charge.
A screen grab of Jetstar's website showing the automatically selected insurance charge.

Jetstar, which has expanded its competition with Air New Zealand to regional air routes, reported record first-half underlying earnings of A$262 million and increased its operating margin, according to Qantas's results.