Plenty of refund turbulence for Air NZ

Air New Zealand faces yet another challenge as its image takes a pasting over ticket refunds. Deep in Covid-caused financial strife, the airline is now fighting a public relations battle as Consumer NZ and a number of its customers roast it over refunds.

The airline can hold the line on non-refundable tickets. They are just that, the fine print says so.

But then it gets complicated. Where does the moral obligation to pay those passengers who bought the usually less expensive tickets start and finish?

Consumer NZ had to push the airline along with a complaint to the Commerce Commission to ensure passengers got refunds they were legally entitled to under international rules covering flights to and through the United States.

Now Consumer is pushing further, arguing that Air NZ with access to a taxpayer loan of $900 million should repay the nonrefundable fares as well. It argues that the airline is in a stronger financial position than those who booked non-refundable fares to bear the financial cost.

Air New Zealand argues that it not only has the law on its side but also the country’s greater good to hold on to the cash which could add up to close to $100m.

This at an airline whose annual revenue of $6 billion has almost totally collapsed and has so far laid off 4000 of its 12,500 staff.

It has already seen its cash reserves plunge from more than $1b at the start of the year to around $640m at the end of last month.

Frankly put, the airline is saying to holders of non-refundable fares it’s a case of “you or us” when it comes to wearing the cost.

The airline is 52 per cent taxpayer owned and is doing everything it can to avoid drawing on the Government loan which could result in a higher level of state ownership if debt is converted to equity.

Consumer Affairs Minister Kris Faafoi has indicated the law may be changed to bring New Zealand into line with not only the US but also Europe, but that will not help those caught in the current mess.

While the merits of the substantive argument can be argued, one thing is certain. Air New Zealand finds itself in the midst of a PR storm that didn’t have to be this bad.

It is going above and beyond with credits for those with nonrefundable tickets but this has not been trumpeted.

By its own admission its systems have been overwhelmed by passengers inquiring about them or wanting to put them to use on a domestic network that is now growing with encouraging speed.

More call takers are coming and more digital technology will help, the airline promises.

During the last two decades Air NZ developed into an airline that was smart and customer focused and its marketing gurus leveraged this expertly. Handling of the refund issue has dented that and provided more disturbed air to fly through.