Air New Zealand has refunded 15,000 ticket holders on compassionate grounds even though they are not legally entitled to a refund.
Those with non-refundable tickets have been left high and dry following the Covid-19 pandemic which has grounded thousands of flights worldwide.
In New Zealand, airlines by law do not need to refund affected customers when cancelled flights are out of their control.
Air NZ has been dishing out flight credit to affected customers, standing firm on not refunding customers with non-refundable tickets.
Consumer NZ, however, has taken issue with the airline's stance - even though no laws are being broken - saying Kiwis need cash, not credit.
After a bit of back and forth, Consumer NZ chief executive Jon Duffy met with Air NZ's chief revenue officer Cam Wallace to discuss the situation.
In a statement, Air NZ said the meeting was constructive, however, Duffy told the Herald the two organisations agreed to disagree in regards to refunding all consumers.
They did discuss the option of refunding on compassionate grounds, the airline noting it had been already refunding some 15,000 bookings.
Duffy said Consumer NZ would still push for a law change to make sure nothing like this ever happened again to Kiwis.
Whenever flights are grounded in the United Kingdom or in the United States, passengers are entitled to refunds, unlike here.
The national carrier said it appreciated the opportunity to discuss the issues Consumer NZ had at the meeting.
Customers were provided with an update on their credit/refund last week and they were asked to review the "Qs and As" on the Covid-19 section on the Air NZ website.
It also provided information customers needed to use their credits when booking new flights, a spokesperson for the airline said.
The airline is also working on a new system allowing customers to check their credit balance and make a booking without needing to contact them.
"We appreciate our customers and their patience as we work to finalise this new digital solution," the Air NZ spokesperson said.
"Our contact centre and social media customer representatives continue to work through a significant backlog and a large volume of queries coming through our social media channels.
"We acknowledge and apologise for the frustrations some customers have experienced when trying to reach us."