Customers are accusing Air New Zealand of sneaky – even misleading – behaviour for hiding in its small print the fact its flight insurance does not cover situations where people’s travel is disrupted because of Covid.

When Margaret Schofield booked her Air New Zealand flight to visit her mum in Blenheim this week and then found herself unable to go because of the Government’s new Covid red light restrictions, she wasn’t too worried.

She’d taken out the airline’s travel insurance and figured she could get a credit or a refund and then go to Blenheim when the rules were clearer around visiting her mother at the retirement home where she lives.

How wrong she was. What Schofield didn’t realise – because she didn’t notice the small print and didn’t click through to the terms & conditions page – was Air NZ’s insurance isn’t valid with Covid-related travel disruption.

“I was one of the people crying”, she says, referring to Newsroom’s story about customers being upset by Air NZ refusing to issue credits or waive change fees for people booked to fly to myriad summer events that have been cancelled this week.

Wicked the Musical is just one of hundreds of events which have been cancelled this week. Photo:

“Air New Zealand will get to keep my fare from Napier to Wellington and will also receive from me the full cost of the replacement fee for that flight, plus three sets of change fees [at $25 each] for the three other flights (Wellington-Blenheim, Blenheim-Wellington and Wellington-Napier). 

“What a profit they made from a pensioner.”

“I feel like they outright stole money from me.”
– Margaret Schofield, Air NZ customer

Schofield says she was frustrated by the two-and-a-half hour wait on hold to talk to someone at the call centre, and by the fact she was listed by Air NZ as a “no-show” for her first (Napier-Wellington) flight, despite having driven to the airport before the departure time and being reassured by staff she wouldn’t lose her flight.

“But the killer is I’d bought insurance against the possibility of having to change and then I was told the insurance doesn’t cover Covid related disruption. I feel like they outright stole money from me.”

The information is there on the Air NZ website – as you can see if you look carefully at the screenshot below. Tucked below large statements about “peace of mind”, “protecting your trip” and “Cancellation cover – in case you’re unable to travel once you’ve booked” is a small-print statement with an asterisk.

“Please note that this domestic travel insurance policy does not provide cover for any claims relating to epidemics, pandemics or an outbreak of infectious diseases.”

Source: Screenshot from flight

There’s no mention of Covid specifically on this page, but there is if you click through to ‘terms and conditions’, where it it’s pretty clear. “We will not pay for claims directly or indirectly arising from or caused by Covid-19, including the threat or perceived threat, of Covid-19,” the page says.

“It’s sneaky,” Schofield says. “Air NZ is blasting out its message of kindness, and they were being good [to customers]. But if you foolishly trusted that we were in the mode before they changed the rules, then would you read terms and conditions? Would the public in general? Of course not.”

Air NZ told Newsroom it has flexible fare options available on all flights “so that in the event of a Covid-related or other disruption out of Air New Zealand’s control, customers are able to change their flight.

“Insurance on the other hand is there to cover medical-related Covid-19 expenses,” a spokesperson says. “”This doesn’t apply in the event of border closures and it is worth noting no travel insurer in New Zealand or Australia covers state, country or government directed border changes.”

The trouble for Air NZ’s customers is its flexible fares cost $40 more per leg than standard fares, but insurance is only $20. Without a clear understanding that travel insurance doesn’t cover Covid disruption, it would likely seem to be a more cost-effective option.

In addition, insurance, which covers baggage as well as tickets, might seem on the surface to give passengers broader protection.

The Jetstar comparison

Book a ticket with Air NZ’s domestic competitor Jetstar (although it doesn’t fly to Blenheim) and the situation with its flight insurance is the same – it won’t cover Covid-related disruption. But it would be hard for anyone to be miss the message.

In Jetstar orange font right above the travel insurance offering is a ‘travel alert’ which mentions the words “COVID-19” three times in one paragraph, and conveys the information about Covid rendering its travel insurance useless in three different ways.

Is Air NZ misleading customers?

Jon Duffy is chief executive of not-for-profit advocacy group Consumer NZ. He says there is always a certain amount of personal responsibility for consumers to do their homework around terms and conditions when they buy a product like insurance. But at the same time, companies have a responsibility to ensure their customers aren’t misled.

“The situation here is finely balanced. Air NZ does remind customers to ‘check what this policy covers’ and mentions ‘important terms and conditions’. But at the same time it is providing a summary of the policy which excludes mention of the biggest thing that people will be looking for when buying insurance at the moment – coverage for Covid disruption.”

At the very least, Duffy says, now the airline knows there are people out there who believe they have been misled (and Schofield’s 2.5-hour wait on hold for a call centre staffer might indicate a fair few people are in the same position), it should be immediately updating its website.

Jon Duffy says potential Covid disruption is one of the biggest things on people’s minds when they buy a plane ticket these days. Photo: Supplied

The Air NZ spokesperson says the company “is constantly reviewing the website and adapting to the new scenarios that play out. We currently have changes in play to make it clearer so customers know exactly what the insurance covers”.

Since the beginning of Covid, there has been “a slight increase” in customers purchasing insurance, but a bigger lift in sales of flexible fares.

More trouble for Air NZ

It’s not the first time Air New Zealand has been accused of hiding things in the small print. In 2005, the Commerce Commission accused the airline of misleading consumers with adverts for cheap flights that failed to mention there were all sorts of additional costs.

“It’s about when the small print changes the message.”
– Jon Duffy, Consumer NZ

In a high-profile case, Air NZ was convicted on 112 counts and fined $600,000 – at that time the steepest-ever fine under the Fair Trading Act.

“Competition is driven by consumers armed with adequate information, forcing competitors to deliver innovation, better prices and superior services,” then Commerce Commission general manager Geoff Thorn said at the time.

While the present insurance omission is certainly not as egregious as the situation with Air NZ’s 2001-2004 ad campaign, Duffy sees some parallels.

“It’s about when the small print changes the message.”

Nikki Mandow was Newsroom's business editor and the 2021 Voyager Media Awards Business Journalist of the Year @NikkiMandow.

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