The men laid a formal complaint with the NZTA, which followed up with an investigation into the incident and issued a $400 infringement notice to the driver.
The driver requested a court hearing, before pleading guilty in writing. He was then fined $1000 and charged $30.67 in court costs.
Rick Barber, regional manager in Auckland for Access and Use - the NZTA group responsible for regulating the taxi industry - said the fine sends a clear message to both the industry and the public that refusing short fares is not acceptable.
"It's not just a question of money, it's also an issue of providing a service. Everyone should have confidence that they can hire a taxi so that they can get to their destination safely, no matter the length of that journey."
The incident is not the first time taxi drivers have been given warnings for refusing low-profit, short-distance fares. The Herald received more than 80 emails about cab drivers cherry picking fares in December 2010, which prompted a rebuke from Auckland Transport Committee chairman Mike Lee.