Member log in

Commission closes Air New Zealand credit card surcharge investigation, with no charges

The Commerce Commission has concluded an investigation into credit card surcharging by Air New Zealand [NZX: AIR] and found that the airline has not engaged in conduct likely to breach the Fair Trading Act (FTA).

The Commission investigated whether Air New Zealand’s conduct and representations about the card payment fee it charges to customers purchasing airfares by credit or debit card is false or misleading and in breach of the FTA. The Commission formed the opinion it was neither misleading nor liable to mislead the public.

“The information provided adequately conveys that Air New Zealand imposes a card payment fee to recover its operational costs in accepting payment by credit or debit card, both by fare category and across its business,” Commerce Commission chairman Mark Berry says.

“We don’t believe the statements Air New Zealand makes about the card payment fee would lead a customer to believe that the fee charged to an individual passenger recovers only the costs in relation to that particular transaction.”

The Commission also reviewed information provided by Air New Zealand about the revenue that it receives from card payment fees and the costs it incurs that are related to card payment. The analysis showed that Air New Zealand did not make a profit from the fee. The analysis by fare category showed there was a minor over-recovery from the domestic fee. However, given that the fee is set in advance in a dynamic market, this was not regarded as an issue in this instance.

“If the fee was described as being for cost recovery purposes, and was actually profit generating, we would have concerns that consumers might be misled,” Dr Berry says.

“As a general rule, if a reason for a price is given, that reason needs to be accurate and not misleading. Otherwise there is a risk of breaching the Fair Trading Act.”

A range of New Zealand retailers and service providers impose a fee to process transactions paid by credit or debit cards.

A retailer may attract the Commission’s scrutiny if it imposes a credit card processing fee, or similar, and describes that fee as recovering its costs in processing payments made by a credit or debit card when in fact the fee recovers other costs or generates a profit.

The Commission notes that if customers do not wish to pay a credit or debit card fee, Air New Zealand does offer them other ways in which to complete their transaction.   

Comments and questions

Making your customers feel ripped off, legal or not, when purchasing tickets is not a great way to build lasting relationships. While I have no problem paying more for Air New Zealand flights versus competitors, the negative impact does build over time.

The credit card charge (which cannot be avoided by using direct debit if you are on an Apple device) are arguably a dark pattern (1) for customers, but much worse than that is the opted-in insurance fee that buyers have to remember to unclick.

These both seem to me to be firmly against Air New Zealand's Values (2) which talk about things like "being approachable, friendly and engaging. Treat customers personally, as individuals. Put people at ease"

Sneaky fees are not a great way to put customers at ease.


Hi Lance,

There's been an update re Apple and POLI web payment

I had problems initially using the POLI web payment on my Macbook (I have a vague memory that the call centre did take a credit card at no fee at the time). However for a while now I've been buying tickets using my Mac Mini, and paying via POLI without problems.

Not sure about iphones etc - haven't tried that.

I would like to use POLI but as it against the terms and conditions of my online banking (ANZ) I can not; without breaching those conditions.

My banks terms and conditions prevent me from using POLi.

Smart bank. I've heard folks say that POLI is terribly insecure.

For an extended period it was not possible to pay online from Mac computers although AirNZ finally fixed this. Yes you could phone up and do it over the phone but who wants to wait forever to get to an operator.
It is certainly a rip off.

Air NZ claim they don't recover costs is the biggest sham of all time.

Somebody paying $1100 for a return economy trip to Hawaii will pay the same $35 as somebody buying an $11000 return business class trip to London despite the merchant fees for the $11000 fare being significantly higher than $35.

Clearly these additional merchant fees could technically be cross subsidised by the margin in the business class price, but no, Air NZ determine these have to be (on paper) subsidised by customer booking low cost domestic and short haul tickets and paying a $4 fee on a $29 domestic fare.