Air New Zealand apologises for poor communication during COVID-19 fallout

coronavirus 10/06/2020

Air New Zealand has apologised for poor communication and a patchy refund process after COVID-19 halted travel plans for thousands of Kiwis. 

The national carrier is under fire for failing to refund costly tickets as trips of a lifetime were cancelled amid widespread border closures. Instead, many customers have received compensation in the form of credits, despite international travel being off the cards for the foreseeable future. 

As a number of households face financial hardship after weeks of restrictive lockdown measures, many customers have expressed outrage at the airline's inability to grant consistent refunds - a repayment that could be imperative to a family's survival.

"What we haven't got right is our communication, and we're truly sorry about that," the airline's chief revenue officer, Cam Wallace, told The AM Show on Wednesday.

"We've been overwhelmed by the scale of this event... we just haven't been communicating proactively. We know this hasn't been our finest hour, we've got to make it right. We want Kiwis to be proud of us."

The airline - which received a $900 million lifeline from the Government and $70 million in wage subsidies - "simply can't afford to refund" all of its customers at the current time, Wallace said. 

"The refund issue is complex," he said. "It's a real balancing act, making sure the organisation survives... but we've got to get through this period."

The AM Show co-host Amanda Gillies explained to Wallace that a close friend of hers had spent thousands of dollars on flights that were scuppered by the COVID crisis. She has received no repayment and after an hour-and-a-half of waiting to speak to a representative, she was hung up on.

Wallace explained the company has been "caught short" on resources, with only 300 staff of a 700-strong target currently working at its contact centre.

Wallace says the airline is currently issuing up to $22 million a day in refunds, with more than $300 million in repayments since the closure of New Zealand's borders.

Which customers are eligible for a refund?

Depending on the intended destination, some customers are guaranteed a refund due to local legislation, Wallace confirmed. For example, Air New Zealand is legally obliged to refund customers who had flights to the United States. Travel to Argentina is also fully refundable. 

The airline also issues refunds based on compassionate grounds. The policy means some customers, who are experiencing "unique" hardship - such as financial or medical - may be eligible for a refund. Roughly 15,000 customers have received repayment based on the airline's compassionate policy. 

When asked by The AM Show host Duncan Garner if customers could get away with "making up a story", Wallace said Air New Zealand "trusts Kiwis to do the right thing".

Wallace said the airline is currently looking into the "technical capability" of transferring credits into Airpoints dollars, a complex process due to possible tax implications. For example, a flight to Shanghai is tax-free - however, a flight to Queenstown will include GST. 

"We want to give customers as many options as practical," Wallace said. "For non-refundable tickets, we're trying to provide a range of solutions."

"A lot of people are happy with the credits as they offer unique flexibility - they are valid for up to two years, you can use them for many journeys."

Former ad-man and AUT adjunct professor Mike Hutcheson reiterated that "communication is key", but believes the relationship between Air New Zealand and its loyal customer-base is fully repairable. 

"We love them. There's nothing nicer than when you're [flying] international, sitting in the lounge at Heathrow Airport, and you see the black and white plane and thinking, 'I'm going home'," he said.

Air New Zealand, which costs roughly $400 million to run per month, is expected to make a revenue of just $500 million this year alone. The $6 billion business is currently losing between $2-$3 million each day.

More than 4000 staff have left the company due to the financial strain caused by the global pandemic, with more redundancies on the horizon, Wallace confirmed.

The chief revenue officer refused the theory that Air New Zealand's new CEO, Greg Foran, has played a part in the company's decline, despite starting on the same day the airline removed services to Shanghai.