The $1 billion Qantas credit class action: Air New Zealand’s response

An Air New Zealand 787-9 Dreamliner. Photo / Brett Phibbs

Air New Zealand says it has been adapted to changing circumstances caused by the pandemic and has been clear on what customers are entitled to.

As Qantas faces a class-action lawsuit over the handling of $1.08 billion of passengers’ flight credits, Air NZ says it has been upfront about credits for the passengers who didn’t have refundable fares.

“Air New Zealand is confident we have provided clear information to our customers about how and when they can use their credits, both at the time those credits were issued and on an ongoing basis, including explanatory emails sent directly to those customers holding credits,” Air New Zealand chief customer and sales officer Leanne Geraghty said.

The airline is under the scrutiny from Consumer New Zealand.

“Consumer has long-standing concerns that many Air New Zealand customers are stuck with credits post-Covid lockdown(s) and those credits are due to expire soon. This is an ongoing focus area for us, and we will continue to keep a close eye on the issue and voice our concerns with Air NZ,” Consumer NZ communications and campaigns manager Jessica Walker said.

Time to use Covid-19 credits is running out.

On its website, Air New Zealand says credits received before October 1, 2022 must be used to book flights before January 31 next year and travel must be completed by December 21 next year.

"We encourage customers to use their credits and to contact us if they have any questions or concerns,” said Geraghty.

The return to profit by airlines has fueled anger about credit policy among passengers, who still struggle to get in touch with them at times.

Virgin Australia is this week also under pressure from furious New Zealand passengers who must use credits by December 31 but can only fly from Queenstown, as the airline quit this country soon after the pandemic hit and has only returned to the resort town. A group called Front Up Virgin Australia is running a survey in Travel Today asking those affected to get in touch.

Virgin Australia was today contacted for comment but has previously been silent on how many Kiwis are affected and what they are owed. The airline has no immediate plans to return to other New Zealand centres after it laid off hundreds of pilots and cabin crew from its Christchurch base soon after Covid-19 hit.

Qantas has been accused of handling over $1.08b of travellers’ money in pandemic flight credit, which lawyers claim amounts to an enormous “interest-free loan”.

Echo Law filed proceedings of a class-action lawsuit against the carrier on behalf of their clients, which the firm says represents “hundreds of thousands” of passengers holding pandemic credit. The firm aims to force the carrier to finally refund outstanding credits with compensation for interest.

It alleges the airline has “enjoyed significant financial benefits” from the scheme. In some cases, they claim passengers may have been misled or encouraged to opt for flight credit when they were entitled to full cash refunds.

“Qantas customers were entitled to a full cash refund for those cancelled flights,” says the Melbourne law firm’s website.

“Instead, Qantas issued the majority of its customers with travel credits or vouchers, which were subject to significant restrictions and would expire if not used.”

Andrew Paull, a partner of Echo Law, told the Guardian the practice of issuing flight credit was widely adopted by airlines during the Covid pandemic, but “that is no excuse for Qantas to take advantage of its own customers and effectively treat them as providers of over $1b in interest-free loans”.

Qantas said on Monday it “completely rejected” the claims. The airline said it had already processed “well in excess of $1b in refunds” from Covid credits, adding, “we’ve been running full page ads and sending emails to encourage customers who want a refund to contact us directly”.

“Qantas has one of the most flexible Covid credit policies of any airline, including among our global peers, and we’ve extended the expiry dates three times,” a statement said.

The airline says it was blindsided by the action, and that as at June this year, there were around $430 million of Covid credits remaining for Qantas customers in Australia.

The majority of these credits range from $108 and $540.

It says a large number of bookings were made through travel agents, and customers for whom that was the case should contact the agent directly to arrange a refund.

It has recently made a number of improvements to make it as easy as possible for customers to user their credits.

In response to claims it enjoyed significant financial benefits during Covid, it says it lost more than $A25b in revenue and posted statutory losses of $7b during the pandemic.

Consumer NZ’s Walker said in this country, there wasn’t provision for class actions.

“Instead, claims that might be brought as class actions in other countries are brought as ‘representative actions’ under the High Court rules. We understand the Law Commission recommended a new Class Action Act back in June 2022, however, this has not yet progressed.”

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.