Travellers to get better deal after Air NZ pricing decision

A good holiday deal will be easier to spot after travel agencies agreed to quote all-inclusive prices in advertised air fares.

The move comes after Air New Zealand was fined $600,000 for misleading advertising.

House of Travel and Flight Centre will both include additional charges, such as Government taxes and airport charges. It means the only added extra will be airport departure taxes which cannot be included in a ticket price and will make it easier for travellers to compare different deals.

The changes follow the Commerce Commission's prosecution of Air New Zealand, which was convicted on 112 charges under the Fair Trading Act for misleading consumers about the real price of airfares in advertising over 2002 and 2003.

Yesterday Auckland District Court Judge Stanley Thorburn agreed to the terms of an agreement between the Commerce Commission and Air New Zealand in which the airline was fined $600,000 - one of the highest penalties ever imposed for misleading advertising under the Fair Trading Act.

It was also ordered to pay nearly $65,000 in costs.

From Monday Air New Zealand will also introduce all-inclusive fares for international airfares.

It has used all-inclusive fares on its domestic flights since March 2003.

Commerce Commission general manager Geoff Thorn said the change in pricing could mean better deals for travellers.

"It is vital that consumers understand the total price they are being asked to pay for a service. Without this knowledge they cannot be expected to exercise real choice and competition within the industry becomes less likely ... Competition is driven by consumers armed with adequate information, forcing competitors to deliver innovation, better prices and superior services."

He said advertising and websites should both show all-inclusive prices.

House of Travel retail director Brent Thomas said the agency had publicly pushed for one of the major airlines to use all-inclusive pricing since at least 2003 to make it easier for travellers to weigh up airfares.

"With Qantas moving to this position a couple of months ago it was a promising sign. However, it is a huge breakthrough to have New Zealand's national carrier adopt the same stance."

Flight Centre general manager Sue Rennick said she expected the whole industry would follow suit within three months.

"It's what the consumer wants and what our consultants want as it gets rid of any misunderstanding and frustration on both sides of a travel purchase."

She said initially travellers might think the higher advertised prices meant airfares were going up, but once the practice was consistent across the industry it would be easier to compare prices.

In sentencing Air New Zealand yesterday Judge Stanley Thorburn said it was clear the type of advertising the company was prosecuted for was used on a large scale by travel industry operators and that Air New Zealand had been singled out for prosecution.

The convictions would make it clear to others in the industry that they had to comply with stronger guidelines about advertising.

The Commerce Commission is still seeking the right to appeal regarding six of the 14 sample charges which were dismissed in November 2005.