Flight Centre warned over advertising and promotion

The Commerce Commission has warned a travel agency that some of its advertising and promotions of travel deals risk breaching the Fair Trading Act.

The Commission has issued warnings in relation to Flight Centre New Zealand ’s advertising between May and September 2009. The warnings related to Flight Centre’s ‘Fly for free’ promotion, to airfares not being available for the advertised price and to the sufficiency of disclosure of additional costs.

Since June 2009, Flight Centre has been running a ‘Fly for free’ promotion. Flight Centre has claimed in advertisements ‘We will beat any airline, web or competitor’s airfare quote or fly you for free.’ However, the Commission’s investigation has established that Flight Centre will not beat any competitor’s quote. Small print and online terms and conditions mean that Flight Centre will only beat quotes that are available to the general public, of the same travel product for the same class and dates, which are submitted to the Flight Centre in writing prior to booking. If these conditions are not met Flight Centre is not obliged to beat the quote or to provide free flights. The Commission accordingly considers that the statement, and the associated promise to fly customers for free, is likely to breach the Fair Trading Act.

“In the Commission’s view, the small print terms and conditions fundamentally change the meaning of Flight Centre’s headline offer. Businesses need to make sure that headline statements accurately reflect what is being offered,” said Adrian Sparrow, Commerce Commission Director of Fair Trading.

Flight Centre has also been warned about advertising airfares at prices that were not subsequently available and about failing to sufficiently disclose additional costs associated with a travel package. The Commission’s investigation established that on one occasion the Flight Centre had incorrectly advertised the price of an airfare and on another had advertised a tour package of Thailand but failed to sufficiently disclose a ‘local payment’ of 20,000 Baht that effectively doubled the advertised price. On yet another occasion, after technical issues with its booking system, Flight Centre displayed un-bookable fares on its website without advising customers on its site that those fares were not available.

“New Zealanders love to travel and are always on the look out for deals that will give them the best value for money. Consumers need accurate information so that they can make informed purchasing decisions. This means that information about travel offers needs to be both accurate and adequately disclosed,” said Mr Sparrow.

“Businesses must ensure that they clearly disclose all costs associated with a purchase at the time an offer is made. Any additional costs that are not adequately disclosed risk breaching the Fair Trading Act,” said Mr Sparrow. “Businesses who gain customers through misleading advertising are also disadvantaging those businesses that are compliant.”

“The Commission considers a warning is the most appropriate enforcement action at this time. We expect Flight Centre to review its advertising and compliance systems to ensure that there are no further breaches of the Fair Trading Act,” said Mr Sparrow. “Commission warnings give a business the opportunity to change its behaviour and ensure that its behaviour becomes what both the Commission and consumers expect. However, the Commission will continue to monitor Flight Centre’s advertising and have given Flight Centre a timeframe by which it needs to confirm whether it is compliant. The Commission reserves the right to take stronger enforcement action.”