Commission travel industry action continues, court fines Budget Travel $8,000
Published05 Oct 1999
Commerce Commission action in the travel industry has continued with Judge Graeme Noble in the Christchurch District Court fining Gullivers Pacific Group Limited, trading as Budget Travel, $8,000 for breaching the Fair Trading Act.
Commission Chairman John Belgrave said that Budget Travel admitted to the Court that it had made misleading claims about its prices. Extra costs could increase the price of Budget Travel's packages to Club Med New Caledonia by more than 50 percent above the prices advertised in the Dominion and Evening Post in Wellington, and The Press in Christchurch.
Budget Travel's advertising stated in large print "from $1,560pp*". However, extra costs not disclosed in the advertisements could be as much as $800 per person.
In these advertisements, pp referred to per person and the asterisk referred to small print. The small print was the phrase "some conditions apply" but there was no explanation of these conditions.
One of the unexplained conditions was that the advertised price was ex-Auckland only and did not apply to travellers from Wellington and Christchurch. Extra costs for travellers from those cities could be up to $800 per person depending on when they travelled.
Mr Belgrave said that the Commission has concerns that the travel industry's compliance with the Act is poor.
"Our surveillance of advertising and complaints from consumers suggest that many travel promotions are misleading and risk breaching the Act," Mr Belgrave said. "We will continue to pay close attention to this industry, and if compliance does not improve more action is likely."
"Travel businesses must understand that the Fair Trading Act applies to them in the same way as it does to all New Zealand businesses. The rules are the same for everyone.
"My advice to businesses is to ask themselves what would their promotion imply to a consumer? What do the large print, the pictures, the loud voice say. It is the impression the promotion gives that is vital."
In a High Court case involving a different industry, the Judge stated: "Small print cannot save a representation from being misleading."
"If travel businesses are unsure of what the Act means to them, then they should get legal advice," Mr Belgrave said.
Other Commission Fair Trading action in the travel industry
The Commission currently has a case before the Auckland District Court against Holiday Shoppe, which is ultimately also owned by Gullivers Pacific Group Limited. The Holiday Shoppe trial is set down for February next year.
In three cases last year the Commission accepted settlements in which Qantas, Cathay Pacific and Singapore Airlines gave signed undertakings of how they would change existing promotions and ensure that future promotions did not breach the Fair Trading Act.
In previous cases, the Auckland District Court fined Qantas fined $8,000 after the airline admitted advertising breached the Fair Trading Act, the Commission accepted a settlement in which Air New Zealand changed statements about its refund policy and Air New Zealand changed a domestic travel promotion after a warning from the Commission.
