Air New Zealand is still dealing with a refund backlog of thousands of claims following extreme weather events and widespread disruption

Following the closures of Auckland Airport with the weather events the airline is now trying to clear a backlog of 20,000 claims from across the network. Many of these are still waiting for refunds, eight weeks after the storm cycle passed.

One passenger said they were told that it could take up to five months to refund their fare. Bex Deverell said she and her partner had booked a “flexirefund” ticket specifically to avoid this problem.

The 45-year-old public servant from Christchurch was travelling with her partner to Canada, when the flights were cancelled by extreme weather.

They were rebooked onto a flight from Auckland to Canada on that Saturday, but without a transfer from Christchurch.

“We didn’t want to leave anything to chance so we paid for a new flight on credit card,” Deverell told the Herald.

Eventually the airline did rebook them on to a Christchurch to Auckland link and Deverell was asked to cancel her extra seats, which she did but a refund did not materialise.

Two months on she got in touch again with the airline to try and track down the refund of her fare. The airline’s customer service apologised for the delay but said they were facing a large backlog in refunds. Deverell was instead offered flight credit, which she refused.

“It was chaotic and there were many uncertainties. We booked a fully refundable flexirefund fare solely for that reason.”

Having applied for the refund via the self-service portal, as instructed, she thought the process would take 5 working days, not 5 calendar months.

“I know that there were thousands affected by the flooding so I can only imagine how many people have been told to wait another 10 to 12 weeks.”

A spokesperson for Air New Zealand told the Herald that dealing with this backlog in refunds was a special focus for the airline. As a refundable fare the ticket should have been processed automatically but had apparently been caught in the long processing queue.

Deverell was refunded in full.

Earlier this month some Air New Zealand passengers had been waiting since November for refunds on accommodation and expenses after being stranded by a cancellation in Auckland.

Refund process has been plagued by complexity: Air New Zealand Chief Customer and Sales Officer Leanne Geraghty. Photo / Sylvie Whinray

Air New Zealand’s 20,000 outstanding refunds ‘not acceptable’

This week Air New Zealand said that they were dealing with ten times the normal number of claims, and had doubled the staff processing refunds to try to clear the backlog.

Leanne Geraghty, the airline’s chief customer and sales officer, said that over the past 12 months the processing timeframe had reached an unacceptable level.

“Refunds and reimbursements are definitely an area we have an acute focus on at the moment. The current timeframe is clearly not acceptable and we are not where we want to be as an airline for level of service.”

The current average wait time is around 5-6 weeks. Although this may be longer for claims where events were outside the airline’s control, such as weather-related refunds.

Civil Aviation and the Consumer Guarantees Act does not give airlines a specific timeframe for dealing with refunds, saying only that passengers are due refunds within a “reasonable” period.

Geraghty said that, although there wasn’t a standard processing time, refunds were well above the historic processing timeframes.

“Where tickets are refundable , ‘self service’ customers should expect a refund ideally within a 10-day timeframe,” she said, although this also relies on third parties, such as credit companies and banks.

Airlines are gilded by IATA and credit companies on how and when to refund fares. There are a number of features built into the payment data processing, to avoid abuse of the refunds process.

“Where it is not a simple refund, these have to be manually refunded, one by one.”

Currently Air New Zealand is dealing with around 20,000 claims, says Geraghty, compared to a historic average of 2000.

Additional staff had been brought into the airline’s claims processing arm, with additional teams trying to find greater efficiencies.

The large amount of flight credit in the system and passengers using multiple forms of payment had led to a greater complexity in processing refunds, with much longer than expected wait times.

What should passengers do if they are owed a refund?

If your flight is cancelled due to matters within the airline’s control you have the right to a refund, plus reasonable expenses.

They can choose whether this is flight credit, to put towards a new booking or a full refund if they have no intention to travel.

Some passengers reported that they were far more readily offered flight credit than a refund, being told it would be quicker to process. Faced with long processing delays, many opted for credit with the airline rather than a refund as the “path of least resistance”.

Air New Zealand said that it was not its intention to give preference to one form of payment over the other.

“Passengers have equal choice to request credit or a refund, where refund is due,” said Geraghty.

Where a refund is due, you can expect it to be reimbursed in the form of original payment. Air New Zealand asks that passengers who have booked directly submit requests via their online portal (airnewzealand.co.nz/request-fares-ticket-refund), or contact customer services. They also ask passengers to be prepared to wait.

“First and foremost we are incredibly sorry passengers are waiting this period of time for refunds,” said Geraghty.

“If a claim has been processed - if you have received a claim processing number via email - we ask passengers to have patience. It is being worked on. Chasing existing claims takes team members away from processing other claims.”

Refund claims are prioritised on compassionate grounds. Photo / Thinkstock

How long should it take for an airline to refund me?

The NZ CAA states what expenses an airline should be liable for and when a fare should be refunded, but it does not give a timeframe for when refunds should be issued by.

“This legislation does not specify a timeframe for processing refunds or impose a requirement for refunds to be processed in a ‘reasonable time’,” a spokesperson for Consumer NZ told the Herald.

Airlines are unlikely to give a set timeframe for processing refunds, as they could be penalised for not being able to meet these processing times.

It is an offence under the Fair Trading Act to mislead consumers about any guarantee, right or remedy available under the Consumer Guarantees Act.

So, the time frame hinges on what is “reasonable” given the circumstances of the specific claim. This would have to be determined in court.

Currently processing times for Air New Zealand refunds took an average of 5 to 6 weeks, but this depended on passenger circumstance.

“We prioritise our queue of requests with refunds on compassionate grounds prioritised first,” Geraghty said, with passengers facing pressing personal or financial needs given expedience.

Then customers impacted by cancellations and Air New Zealand operations.

Finally those impacted by weather incidents and events out of the airline’s control were a third processing tier.

I’m still waiting for a refund from my airline. What can I do?

If you’re still owed a flight refund and it has taken longer than expected to process, there are steps you can take.

Most refunds for cancelled flights are automatically processed and should be a straightforward process. However, if you have expenses from a disrupted journey it can be a more complex task.

In New Zealand the Civil Aviation Act states that passengers are entitled to compensation from disruption, where the airline is at fault, of up to 10 times the cost of their ticket or the actual cost incurred by the delay, whichever is lower.

Consumer NZ told the Herald that passengers should contact their bank if refunds are taking excessively long.

“If the airline hasn’t refunded the fare within 6 weeks, the consumer could contact their bank and ask for a chargeback,” they said.

Consumer NZ shared a four step guide to getting a claim refunded by your airline.

Step One - Be prepared

The first step is to keep receipts and evidence of expenses from your disruption. Keep track of food, accommodation and additional costs that have resulted from your cancellation.

Step Two - Contact the airline

Contact the airline directly via phone, email or in person. Ask directly for a refund and provide evidence for expenses incurred. Many airlines are experiencing backlogs and delays in processing claims. If the airline gives you an expected wait time, have patience. Even with delay, it’s likely to be more efficient to deal directly with the airline.

Step Three - Claim through insurance

If you do not get a response or there is an issue with your claims, you should try submitting costs through your travel insurance. Be clear that you have already tried to submit a claim to the airline. From here your insurer should be able to deal directly with the carrier airline to work out who is liable for a payout.

Step Four - Seek further assistance

If you haven’t had a resolution to your claim, seek assistance from Consumer Protection, the Citizens Advice Bureau or a local Community Law Centre.

These organisations will help provide advice on how best to claim back any money you are owed.