Air New Zealand’s Greg Foran on Refunds: ‘We’re not trying to be difficult’

Air New Zealand chief Greg Foran maintains that the airline would not be operating if it had reimbursed everyone who had canceled flights, but says he welcomes a review of the law covering refunds.

The airline is under renewed pressure from hundreds of millions of dollars in customer money it has, and Consumer NZ says it needs to review its hard-line policy on refunds.

While other airlines have refunded all types of tickets if passengers want their money back, Air New Zealand adheres to its policy of refusing to refund non-refundable tickets except in special circumstances, although the prospects of flying abroad soon they are still rare. This could mean that the airline has used the money for years.

Foran says the airline wasn’t trying to be difficult and was in the process of incorporating more flexibility in dates from credits, which in most cases it offers in lieu of refunds.

“As I’ve said throughout the year, of course I’d love to reimburse everyone, but if I reimbursed everyone, what are we going to do to keep the airline running? It’s not Air New Zealand trying to be difficult, it’s not Air New Zealand that hides behind nothing. “

At the beginning of last year, Air New Zealand had more than $ 1 billion of advance revenue, mostly unused tickets, on its balance sheet and this had dropped to $ 828 million as of June 30.

“Was I going to get all my wages paid or was I going to withdraw more [$900m] government loan or go and create more debt? Like any of these things, what we try and do is look at what we think is a balanced and correct approach, “he said.

The airline continued to spend between $ 65 million and $ 85 million in cash per month, despite the strong recovery in its domestic operation. Air New Zealand is 52 percent owned by the government on behalf of taxpayers and has the option to convert the backing loan into equity.

“It’s not as simple as saying ‘pay it back’. If you pay it back, where are you going to get the money? Are you going to end up having to borrow more? Do you want to nationalize the airline? Exactly what are you going to do?”

Foran said it was no different than having a bank account.

“If you have the money and you have it to pay someone, do it; if you don’t have it, then you have to think of a different way to do it.”

He said that airlines abroad that had reimbursed the fares had different levels of state support and governments covered the licensing schemes. In this country, the salary subsidy was equivalent to approximately 13 weeks of total payroll in the airline, where the number of employees fell from approximately 12,500 to 8,500 in the last year.

Airlines from other countries were also required by law to reimburse.

Under changes to the Civil Aviation Act, New Zealand could follow other countries, such as members of the European Union, which require airlines to reimburse if they cannot offer a service.

“I would have to say from my perspective, I am glad there is an ongoing review.”

He started at the top of the airline a year ago and said he entered a “firestorm” with the airline in March, dealing with 75,000 calls a day for booking problems. The highest daily number of previous calls was 9900.

“I got into a kind of firestorm of a business that operates effectively using cash from customers that they’ve given us and had to deal with all of that refund problem,” he said.

“I’m glad we see it as a country, I’m glad we see it as an industry and see what comes out of it,” he said.

“If we end up putting in something like the EU situation, then in New Zealand we will have to take a look at their balance sheet and how much cash they require.”

Regardless of any change in the law, the airline would review its refund policy if the consequences of the pandemic on travel are prolonged.

“A lot of this depends on how quickly things pick up, if things are going to pick up pretty quickly then that’s a different approach than if we’re still sitting here a year from now and not doing any international travel. We will have to rethink what we do. “

The airline had just implemented systems to deal with complex credit situations that had not yet been resolved for a “small group” of passengers.

The review was continuing that expanded the reserves and floating windows for credits and the details would be announced soon.