Qantas Airways' (ASX:QAN) subsidiary Jetstar has been fined NZ$2.3 million for misleading consumers about their compensation rights for delayed or cancelled flights, violating the Fair Trading Act, according to a statement from the New Zealand Commerce Commission.

The airline's actions resulted in thousands of consumers being left financially disadvantaged after their claims were unfairly denied, according to Vanessa Horne, the commission's General Manager of Competition, Fair Trading and Credit.

"Our investigation found that the misleading practices were the result of embedded shortcomings in Jetstar's internal policies and instructions, which enabled staff to decline legitimate claims to compensation," Horne said.

Under the Civil Aviation Act, airlines are responsible for reimbursement for loss caused by cancellations or delays on domestic flights within their control, Horne said.

Jetstar didn't immediately respond to a request for comment from MT Newswires.