Air New Zealand expects to bank $20 million of unused credits

Air New Zealand expected to make $20 million in six months from travel credits. Photo / Dean Purcell

By Susan Edmunds of RNZ

Air New Zealand is expecting to make $20 million in six months from travel credits that customers won’t use.

The airline told the NZX on Wednesday it expects its full-year underlying profit to be down as much as a third compared to last year given a “substantial” drop in the compensation it expects to get from engine manufacturers for its grounded aircraft.

The national carrier estimates earnings before taxation for the 2025 financial year to be within a range of $150m to $190 million, compared with $222m last year.

Air New Zealand said it expected to make $20m from “credit breakage” in the second half of its financial year - money from prepaid airfares, travel vouchers and other credits that customers have not used and now probably will not.

The airline counts the credits as revenue when it is confident they will not be redeemed or they have expired.

Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, said the pandemic led to mass cancellations and many people opted for credits instead of refunds at the time.

“Some may have forgotten these, moved or found travel plans unfeasible especially with Air New Zealand’s reduced capacity limiting booking options.”

He said the $20m was probably more than Air New Zealand had been expecting.

“It’s a material amount of their earnings for the period.

“Check your Air New Zealand Airpoints or credits you have with them, roll them over if possible, and do it quickly before they expire. Use them if you can, transfer them to someone else if you can or use them to buy in store if you’ve got Airpoints, but $20m in credit breakage expected in the second half of this year is a decent chunk of consumer money about to be worthless.”

Air New Zealand has been approached for comment.

Consumer NZ spokeswoman Jessica Walker said her organisation had raised the issue with Air New Zealand on multiple occasions.

“We are concerned the airline will be able to pocket this money and that consumers are losing the money they spent on airfares with the airline.

“We’ve also called for the Civil Aviation Act to be amended to require airlines refund passengers when their flights are cancelled or delayed, like they are in other countries. However, these changes have not been introduced.”

Credits that were issued during the lockdown period of the pandemic have to be used to make a booking by January 31 next year and the travel must be completed by the end of the year.

Anyone with credit that was issued after October 1, 2022, has 12 months from the date of issue to book it and then the travel must be completed within 355 days.

- RNZ