He said about 98,000 passengers were affected in New Zealand by flight cancellations within Jetstar’s control.
Compensation was not available in excess of monetary caps Jetstar imposed.
The airline in this case also refused to provide affected people overnight accommodation. This can be due if the airport is not in a traveller’s home town or more than 15km from their home.
Only a Jetstar recovery flight or refund of the unused ticket were available.
The judge said Jetstar did not meet legal requirements for refunding customers when flights were cancelled for reasons within the airline’s control.
The airline had claimed some experienced agents were retrenched during Covid-19 and replaced with inexperienced agents.
“That may be so but of course it’s no defence,” Judge Gibson said.
“There were also contradictory instructions on the documents” staff used to advise people about refunds, he added.
He said an agreed starting point was a $2.5m fine.
Jetstar received a 10% discount for having no prior New Zealand convictions and a 25% discount for pleading guilty.
But an uplift was imposed for Jetstar’s financial capacity - in other words, the judge decided it was a substantial company with the ability to pay a fine.
Judge Gibson decided on a $2.25m penalty.
Consumer NZ chief executive Jon Duffy said the prosecution was a landmark case.
“A $2.25m penalty sends a clear message that airlines cannot mislead passengers and expect to get away with it.”
Consumer NZ was among the complainants.
“This wasn’t just poor service. These were embedded practices that left people out of pocket when the law actually offered them protection,” Duffy said.
“Passengers often didn’t know their rights and were actively misled by this conduct.”
He said the Civil Aviation Act should be changed to ensure airlines are required to tell passengers about their entitlements when delays or cancellations are within an airline’s control.
“We need rules that protect travellers and ensure fair treatment. Without that, airlines profit from passengers’ confusion. There should be no place for that kind of behaviour in a competitive aviation market.”
But he also said Jetstar had engaged with Consumer NZ and the Commerce Commission, sought advice on complaints, and improved communication with passengers.
“As a result, we have noticed a significant reduction in the number of complaints we receive about Jetstar.”
The sentencing was to be held last week but was pushed back to today.
On August 21, prosecutor Jacob Barry said there was no dispute that the case involved “reckless offending by a corporate of substantial means”.
Jetstar counsel Joe Edwards said the airline was sorry and had installed new systems to ensure no repeat of the offending.
The case has already led to Jetstar refunding more than $1m and paying $860,000 to an unnamed children’s charity.
The biggest known fine in a Fair Trading Act case was $5.9m, imposed on Lion’s Share pyramid scheme promoter Shelly Cullen in June last year.
And in August last year, Foodstuffs North Island was fined $3.25m in a prosecution under the Commerce Act for imposing anti-competitive land covenants.
