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P&O faces a bill of at least $2.6 million after a luxury liner managed only 200 metres of a luxury cruise.
The company called off the eight-night Tasman Tango cruise because of a faulty ventilation duct.
Instead of a South Pacific cruise, passengers on the Pacific Star got only a short trip between Auckland's Princes and Queens wharves when their ship had to move to so another vessel could berth.
Passengers had been waiting to leave since 4pm on Tuesday, and were told on Wednesday night that when they woke the next morning they would be at sea.
But at 9am yesterday the captain said the cruise was off. It is the Pacific Star's third cancelled cruise in less than a month.
P&O Cruises chief executive Ann Sherry said the ship's 1145 passengers would receive a full refund and a 25 per cent credit on a future cruise.
This is the same compensation deal given to passengers on the previous cancelled cruises.
The company refused to say how much the cancellations had cost it, but a conservative Herald estimate puts the figure at at least $2.6 million, based on the lowest available fare of $2300.
The company has also given 25 per cent discounts to all passengers and waived any fees incurred while on board waiting to set sail.
Some passengers leaving the ship yesterday were annoyed at the cancellation - particularly after P&O said it found the fault on Monday night, before they boarded.
"We felt we were boarded on false pretences," said Arlene Olsen from Auckland.
"They should have been up front with us a lot earlier."
A P&O spokeswoman said the company was not worried about its reputation despite the three failed cruises.
"There are many thousands of people cruising the Pacific every month, but you only hear about the disasters," she said.
"Our research shows word-of-mouth is the best driver, so this negative experience is far outweighed by the many positive ones."
Not all passengers disembarking yesterday were upset.
Viv McGowan described the three days on board as the best she had had in a long time.
"P&O and the staff on board did a wonderful job, and the manner in which they handled everything was fantastic.
"We are definitely going to go on another cruise."
Ms Sherry said the frustration was understandable and apologised "unreservedly for the disappointment and inconvenience".
The Pacific Star was last night sailing direct to Brisbane with no passengers instead of via Mystery Island, Noumea and Isle of Pines with a full load of tourists.
It will be repaired in dry dock in Australia.
"While this has inconvenienced our passengers, we are a company that always errs on the side of caution in the interests of passenger safety," Ms Sherry said.
The Ministry of Consumer Affairs said yesterday that any passengers unhappy with the compensation offered could go to the Disputes Tribunal.
P&O and its cruises were bound by the Consumer Guarantees Act, which held the company to certain standards.
A ministry spokeswoman said that even if the compensation was reasonable, passengers could also claim for "consequential losses" if they had incurred financial losses because of the cancellation.
