The Commerce Commission says it has issued a formal warning to Malaysia's Air Asia X Service Pty Ltd (AirAsia) over the way it sold flight tickets to New Zealand customers online.

The Commission says AirAsia has agreed to end its preselection of checked baggage and change how it discloses its processing fee.

"The Commerce Commission believes that in preselecting luggage at an extra cost to the advertised flight price, and not properly disclosing a mandatory processing fee, AirAsia was likely to have misled consumers over the price of its services," it says.

Commission Chair Mark Berry says AirAsia has cooperated fully and a warning was appropriate.

"We have been proactive about tackling opt out pricing, with the travel industry a particular focus for us. 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," Dr Berry says

"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."