Two Rotorua Airport staff members manning the check-in counter were alerting customers to the problem as they entered the waiting lounge.
Many people who the Rotorua Daily Post spoke to had read about the radar fault on their way to the airport.
One staff member, who could not be named, said all the customers had been understanding of the situation.
Wellington residents Ben Aves, Shar Amner and Simon Phillips had been in Rotorua for two days to attend a conference.
Mr Amner said they were deliberating whether to "stick around the airport or stay in Rotorua another night".
"Ideally we want to get back to Wellington tonight as we have work and meetings tomorrow so depending on when we can get onto a flight, we may have to get a rental car and drive down.
"This situation is disruptive but there's not much we can do about it so there is no point getting angry."
Another passenger said she was flying to Wellington to catch a connecting flight to Christchurch.
"I'm hoping that because all the flights across New Zealand are grounded, the connecting flights will be changed too."
Their 5.05pm flight was later cancelled.
Civil Aviation will investigate the cause and work on a solution to prevent another outage.
"At no point were any passengers or aircraft at risk due to the implementation of Airways contingency planning procedures," the Civil Aviation Authority spokesman said.
Earlier: An Auckland Airport spokesman says Airways New Zealand has confirmed the fault was fixed and flights could now depart again.
A Rotoura flight to Wellington due to depart at 5.05pm was to leave at 5.55pm but has since been cancelled.
Air New Zealand said it will take some time to clear the backlog of delayed flights:
"Flights are now departing but the backlog will take some time to clear as approximately 160 international and domestic Air New Zealand flights have been impacted this afternoon and into this evening."
Earlier: All commercial flights have been grounded across the country due to a radar fault.
Radio New Zealand have reported that the nationwide fault means flights currently up in the air can land but no planes are allowed to take off.
A Rotorua Daily Post reporter is at the Rotorua Airport where the next flight to depart is the 5.05pm to Wellington. She said only a handful of people are waiting for flights but more are expected to arrive within the hour.
"One passenger said he has just read about the issue and he's holding out hope that it would sort itself out," she said.
Air New Zealand is not immediately able to comment on the volume of flights or passengers affected by the fault. The airline says staff are working to release more information soon.
An Auckland Airport spokesman told the Herald that all flights in the air could land, but departures were halted until the fault was resolved.
"We were informed by Airways New Zealand of a radar fault which is affecting all flights nationally," he said. "There is no resolution at this stage.
"All flights across the country are able to land but they are holding all departures until the fault is resolved."
A similar fault has occurred in previous years, he said.
A Civil Aviation Authority spokesman says the regulator is liaising with Airways New Zealand to ensure the problem is resolved as soon as possible.
