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Air NZ bins automatic travel insurance after warning from ComCom

06 Mar 15

Air New Zealand, the national carrier, will scrap its pre-selected travel insurance option after receiving a formal warning from the Commerce Commission, which is cracking down on businesses misleading consumers with 'opt out' additional products.

The Auckland-based airline has agreed to no longer pre-tick travel insurance on its online ticketing system from April after a warning from the anti-trust regulator, the commission said in a statement. Previously as customers went through the check-out insurance options had been automatically added on, needing the buyer to actively un-check the option.

"Consumers are perfectly capable of deciding for themselves whether they want to pay for additional products or services," commission chairman Mark Berry said. "If a company is concerned that its customers need insurance then a suitable approach is to require them to tick 'yes' or 'no' in a mandatory field and leave it in their hands."

The ditching of the policy comes as the regulator cracks down on businesses using 'opt out' options which it says could be misleading consumers to buy things they didn't intend to. The commission wants companies to employ an 'opt in' approach when selling add-on products online to avoid any possibility of the Fair Trading Act.

"We will be targeting other companies we are concerned about," Berry said. "We would encourage all businesses selling online to proactively change their behaviour or drop any consideration of introducing this practice. We believe Air New Zealand made the right decision and other businesses should follow their example."

Last year, the airline had another brush with further regulation after it cancelled several regional domestic routes citing high costs to keep the flights operating. The New Zealand Airports Association lobbied the Commerce Commission to regulate Air New Zealand's regional air fares, where it says it has an effective monopoly. While in September, Prime Minister John Key said he had told the airline it should lower regional airfares if it could, and was supported by former Commerce Minister Craig Foss, who oversaw competition law.

Last week the national airline posted a 20 percent increase in normalised earnings before tax of $216 million, driven by lower fuel prices and increased numbers of travellers.

Shares of the airline last traded at $2.95 and have gained 19 percent since the start of the year.

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