The consumer watchdog, Consumer New Zealand, says it is not reasonable for Air New Zealand to deny customers refunds and offer them credits instead.

Consumer New Zealand chief executive Jon Duffy says some Air New Zealand customers affected by the coronavirus pandemic have been refunded due to international regulations, for example some people with flights into the EU have or should be refunded.

But Jon says New Zealand regulations on refunds were out of step with the European Union and the United States.

Consumer Affairs Minister Kris Faafoi has indicated the government would look at changing the law in future so customers were not left carrying the cost, Jon says.

Yesterday, Air New Zealand apologised to customers who have been unable to use their airfare credits, but said it cannot afford to offer refunds to everyone who has had flights cancelled.

Its chief financial officer, Cam Wallace, told RNZ the airline would have to dip into its $900 million government loan to refund everyone.

"If we use it, it would accelerate our financial position in having to use it earlier and it would mean we make different decisions in terms of reducing our cost base, so these are the decisions we have to make," Cam says.

Jon says it was definitely an option and the loan was there to ensure that Air New Zealand was able to continue trading through this period.

"I guess the bigger question is, is it reasonable for customers who have had flights pulled out from under them to expect Air New Zealand to take their circumstances into consideration and offer a refund if it's warranted?"

Jon says Air New Zealand's reaction to the situation had been a "comms debacle".

"It was only yesterday that Air New Zealand actually responded to a letter that we wrote to them two weeks ago and it was only yesterday that they came out for the first time with any stance on this issue, other than a couple of media statements that said the law's on their side so they'll do what they want.

"In terms of managing this and meeting the expectations of their customers, they've really failed and they apologised for that yesterday to their credit."

Jon says Air New Zealand customers who have tickets in this category should be given the choice of either a refund or a credit.

A useable credit would be an acceptable option for some people, he says.

"But there would be some people who because of their circumstances, who are changing economic situation who will be really doing it tough and really need to get their cash out to help them pay the power or pay rent or put food on the table.

"It's those people who I think Air New Zealand's customers would expect Air New Zealand to at least make some sort of consideration over whether they pay a refund."

-RNZ