Air NZ and watchdog lock horns over refunds
Air New Zealand bosses and Consumer NZ will meet today as complaints over fare refunds and difficulties contacting the airline grow.
The ongoing anger over Air New Zealand’s handling of the issue led to another apology from the airline yesterday in an email sent to customers and on social media.
But the Consumer NZ push for refunds on non-refundable tickets is unlikely to be successful with the airline’s chief revenue officer Cam Wallace yesterday saying “we are not in the financial position to offer full refunds on non-refundable fares.”
“Providing credits is in line with almost all other airlines and similar businesses and helps ensure that over the longer term, Air New Zealand has sufficient resources to allow us to continue operating.”
The airline has warned that in spite of being able to tap into a $900 million taxpayer loan, its financial future would be jeopardised by refunding tens of millions of dollars in nonrefundable fares.
“Like most businesses, we are still facing some extraordinary circumstances. Despite government support through a loan facility, the wage subsidy (of more than $70m) and significant cost reductions including the loss of 4000 members of our team, we are not in the financial position to offer full refunds on nonrefundable fares.”
But Consumer NZ chief executive Jon Duffy has reiterated his organisation’s view that the airline is in a better position to wear the financial hit than tens of thousands of customers whose flights were cancelled and who needed cash rather than credits.
“From a legal perspective Air New Zealand is right to the extent of saying it doesn’t have a legal obligation to refund non-refundable tickets. Our position is that the law is broken, the law needs to be fixed,” he said.
“And that doesn’t mean you don’t have a moral obligation to refund consumers now.”
Duffy said he would meet Wallace today to discuss the refund issue and find out more about how the airline would improve its processing of customer complaints and inquiries over credits. The airline is promising to streamline its systems to help customers but this would not be in place until next month.
“It’s not like this should have been a surprise to Air NZ that people would want to use those credits.”
Disputes over tickets weren’t covered by the Consumer Guarantees Act, but by the Civil Aviation Act which is now being overhauled but won’t be applied retrospectively. Duffy said he hoped it would be changed to be in step with the United States and Europe where passengers
could demand refunds for cancelled flights, no matter what the ticket type.
Credits were offered as an option in those jurisdictions and he said that could work here.
“We’re not here to put Air New Zealand out of business — we’re just wanting to see consumers get a fair deal.”
Wallace told customers the airline was “incredibly sorry” for the long wait times and delays in processing credits, and had a number of steps under way to address this urgently.
The Commerce Commission has reiterated its advice saying “in general, a consumer’s legal entitlement to a refund or credit when travel or an event cannot take place will be determined by the terms and conditions of their ticket or booking.”
Some contracts will provide rights to a refund; others may state that a credit will be provided, allowing the consumer to rebook at a later date, or allowing an event to be held at another time. Contracts for the supply of goods or services may also explain what happens when the goods or services can not be provided as planned.
On the subject of credits the Commission says:
“The terms and conditions of a ticket (also referred to as Conditions of Carriage) will set out the remedies available in the event that flights have been cancelled due to the virus.
“In many instances this will provide for the value of the ticket to be held in credit for use within a certain period of time.
“In some situations, you may be entitled to a refund but this will depend on the conditions of your ticket.”
The Commission says that remedies were unlikely under the Civil Aviation Act 1990 provides a remedy.
An airline is liable for damages caused by delay, but this does not apply where the airline is acting under lawful directions, or there is an external event that makes it impossible for the flight to proceed.
We’re not here to put Air New Zealand out of business — we’re just wanting to see consumers get a fair deal.
Jon Duffy (left), chief executive, Consumer NZ