Why Air NZ should refund all its customersMay 21, 2020
Pressure is mounting on Air New Zealand to put the interests of its customers above those of its shareholders and repay travellers who are potentially out of pocket by hundreds of millions of dollars for plane tickets they bought before flights were cancelled because of the Covid-19 pandemic.
Consumer advocates say Air NZ customers who are refused refunds for flights they have paid for, but can’t take because of Covid-19 restrictions, are basically giving an involuntary, no-interest, unsecured loan to our national carrier. A carrier which is also potentially benefiting from $900 million of taxpayer money.
The airline is only giving refunds when it is forced to under overseas consumer protection legislation.
This is despite receiving a $900 million bailout from the Government, in the form of a loan the airline can use if its cash reserves drop below a certain level.
Finance Minister Grant Robertson said the money would ensure the airline’s financial viability.
The reason Air NZ is able to offer credits, rather than refunds, is because airlines in New Zealand are exempted from normal fair trading provisions which force companies to provide refunds to customers.
Under the Consumer Guarantees Act, if you bought a fridge, a car or a set of linen sheets before the pandemic and the company you bought them from cancelled your order and didn’t deliver the goods “in a reasonable time”, you are entitled to a full refund.
Not so if you bought a plane ticket. Under the Civil Aviation Act – basically a loophole for airlines – Air NZ is legally entitled to keep your money unless it is the airline’s fault your flight is cancelled. If it’s a problem with the weather, or a global pandemic, well that’s tough. They can keep your money. If they are feeling generous, they can offer you a credit you may or may not be able to use.
Consumers are being asked to extend interest-free credit to the airlines.
Air NZ is only paying real cash if it is forced to because one of its international flights comes under another country’s more consumer-friendly laws – for example, if a flight starts, transits or finishes in the US or Europe.
Even then the airline has been reluctant to always pay up. Consumer NZ was forced to take a complaint to the Commerce Commission this week before Air NZ reluctantly conceded that customers whose flights transited in the US were entitled to refunds.
“Consumers are being asked to extend interest-free credit to the airlines,” says Jessica Wilson, Consumer NZ’s head of research.
“We think it’s time for the Government to step in and take action to protect consumers disadvantaged by outdated laws.”