AirAsia X has been officially warned by New Zealand's competition watchdog about its pricing practices after it failed to disclose a mandatory processing fee and forced passengers to opt out of a preselected luggage option.
The New Zealand Commerce Commission said the budget airline's practice of preselecting luggage at an extra cost to the advertised flight price and not properly disclosing a mandatory processing fee meant the carrier was likely to have misled consumers over the price of its services.
It issued AirAsia X, which began flying to New Zealand in March this year, with a formal warning but noted the airline had now changed its practices.
AirAsia X is one of a number of carriers to have crossed swords with competition regulators about hidden fees not included in the advertised fare and “opt out’’ charges which consumers end up paying unless they take action such as unchecking a box.
The New Zealand regulator began cracking down on the practice last year and Air New Zealand was among a number of companies to agree to stop using it. In March this year, Jetstar gave court enforceable undertakings to the commission ending its preselection of a range of services.
AirAsia X agreed to change its online booking process from July to sell checked baggage on an ‘opt in’ basis and to disclose the processing fee early in its booking process. It also introduced an alternative payment method that enables customers to avoid the fee entirely.
Commerce commission chairman Mark Berry said AirAsia had cooperated fully with the investigation and a warning was appropriate in this case.
“We have been proactive about tackling opt out pricing, with the travel industry a particular focus for us,’’ Berry said. “We are pleased that AirAsia has moved to improve their pricing practices, including how they disclose their processing fee, after we contacted them with concerns when they re-entered the New Zealand market earlier this year.’’
“Since we began investigating opt out pricing last year we have now seen seven companies put an end to this practice, which is great for consumers. We have made our position very clear on this issue and expect businesses to stick to an ‘opt in’ sales approach to avoid any possibility of breaching the Fair Trading Act.”
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