Commerce Commission pushes KiwiRail to compensate customers for cancelled ferry sailings

Interislander customers, who were due to sail on the Kaitaki ferry in early 2023, are among those now being compensated for cancellations. Photo / KiwiRail

More people whose travel plans are derailed by Interislander ferry cancellations will now be eligible for compensation.

Interislander – which is owned by the state-owned enterprise KiwiRail – is loosening its approach towards compensating customers affected by mechanical breakdowns to ensure it complies with the law.

It is compensating customers affected by a raft of cancellations in early 2023.

It’s also opening itself up to considering reimbursing customers affected by other cancellations in the past, and using a more consumer-friendly compensation policy going forward.

Interislander’s move follows a Commerce Commission investigation, which prompted it to admit its approach towards compensation may have breached the law.

Legally, Interislander needs to compensate customers affected by cancellations caused by factors within its control.

Whether or not a particular mechanical breakdown is in its control can take time to get to the bottom of, with the ferry operator in the past concluding a breakdown wasn’t in its control, when in fact it was.

This misdiagnosis led to it wrongly telling customers they were ineligible for compensation.

Interislander admits the error, and is remediating those affected by three breakdowns in early-2023 – the Kaitaki losing power between January 28 and March 4, a heat exchanger problem with the Kaiarahi in February, and a gearbox issue affecting the Kaitaki between March 4 and April 12.

People affected by other cancelled sailings due to breakdowns, who believe they might be eligible for compensation, will need to contact Interislander themselves.

The costs Interislander may compensate customers for could include ferry tickets, flights, accommodation or car hire.

Going forward, Interislander will treat a breakdown as being within its control, unless it’s clear from the get-go that it isn’t.

Commerce Commission general manager Vanessa Horne said Interislander’s commitment would “put money back in the pockets of affected consumers, and crucially, set out a more straightforward path for getting a refund going forward when a ferry trip is cancelled”.

She noted Interislander’s commitments to the commission were legally binding and enforceable by the courts.

KiwiRail couldn’t put a figure on how much its remediation efforts would cost.

Its chief customer and growth officer Adele Wilson said: “We have fully cooperated with the commission and acknowledge that we could have done better by our customers in the early part of 2023 and need to do better by our customers going forward.”

Wilson said KiwiRail had revamped its maintenance regime since 2023, with ferry sailings becoming more reliable since then.

Upgrading its fleet of old ferries has been the subject of much back-and-forth between Government ministers in this administration and the previous one.

The latest is that the Minister for Rail Winston Peters plans to replace the three Interislander ferries with two new ones, with “road and rail decks”, in 2029.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.