The Government and Air New Zealand have apologised to the families of the 257 people who died in the 1979 Erebus disaster, to the relief of the families of the victims. 

Family members have gathered at Government House in Auckland to mark 40 years since the tragedy.

Prime Minister Jacinda Ardern says the way the report was handled was wrong, and the wrongs need to be acknowledged.

She says after 40 years, it’s time to say she’s sorry, on behalf of the Government.

Air New Zealand chair Dame Therese Walsh says the airline apologises for failing its duty of care for passengers and staff.

Walsh says she apologises to the families, who were poorly treated by Air New Zealand staff.

Kathryn Carter is the daughter of Jim Collins, the Air New Zealand pilot who flew the plane that day.

Kathryn Carter says idea behind the Erebus Memorial design is a journey into the sky, appealing to the sense of exploration felt by the flight's passengers. Photo / RNZ / Claire Eastham-Farrelly

She told Heather du-Plessis Allan they weren't expecting a sorry today and they're overwhelmed.

"The crew have been vindicated. Dad has been exonerated from blame for the accident, and fundamentally that was always a huge burden that we carried as he was a great Dad and he didn't come back and he intended to come back."

Carter says they were simply expecting to remember the 40th anniversary when they were surprised by the Prime Minister's words. 

"We've been disappointed before, we just thought it was lovely to get together with people who have been through same circumstances." 

She says that there is a feeling of relief that the truth that they've known for a long time has finally been acknowledged.

She says that privately, the Prime Minister told her that this apology should have happened much earlier. 

Jim Collins captain of flight TE901. Photo / supplied