Interislander admits it likely misled customers

After a Commerce Commission investigation, KiwiRail, which owns and operates Interislander ferries, has accepted it needs to refund customers in the event of mechanical failure.

KiwiRail has agreed:

• its historical terms and conditions, as well as some statements made to consumers, were likely to have misled consumers about their rights
• to compensate all affected consumers
  
• to re-evaluate previous claims for compensation
• to update its policies, terms and conditions to ensure they comply with consumer law.

If KiwiRail fails to comply with these undertakings, the commission can apply to the court to enforce them.

Vanessa Horne, the commission’s competition, fair trading and credit general manager says, “These commitments will 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.”

Win comes after Consumer NZ complaint

The refunds come off the back of our complaint to the commission, alleging Interislander, and second Cook Strait operator Bluebridge, were misleading consumers about their rights.

In early 2023, two Interislander ferries suffered three mechanical issues between them. Kaitaki lost power off the coast of Wellington in January, while Kaiārahi suffered a heat exchanger issue in February. Kaitaki would go on to suffer further gearbox issues in March.

At the same time, Bluebridge ferry Connemara’s sailings were interrupted as the result of an engineering issue.

In each case, the ferry issues caused cancellations, impacting customers’ travel plans and leaving many out of pocket. Some faced extra costs of hundreds of dollars just to cover accommodation and alternative transport.

Both operators maintained they weren’t liable for any loss caused by cancellations or delays, regardless of the circumstances.

But, under the Consumer Guarantees Act, each operator was required to carry out its ferry service with reasonable care and skill. Where it failed to meet that guarantee, the operator was required to refund consumers and compensate them for reasonably foreseeable costs.

We received several complaints from customers affected by these ferry cancellations. We used these complaints to inform our own, which we sent to the commission in late February 2023.

Over a year after our complaint, in May 2024, the commission warned Bluebridge about its conduct.

At the time, Horne said Bluebridge’s conduct was likely a breach of the Fair Trading Act.

In December 2024, a Consumer supporter got in touch with us about a refund they had received nearly two years after they had made a claim to KiwiRail. The operator had started proactively contacting customers impacted by the early 2023 incidents.

Now, more than two years after our complaint, consumers finally have certainty about their rights to compensation when a ferry sailing is cancelled due to mechanical issues.

Your input has impact

In many cases, your input is pivotal in helping us keep up the pressure on businesses that don’t comply with the law.

Complaints from our supporters about their disrupted ferry travel were instrumental in achieving this particular outcome.

“This win for consumers is all down to people taking the time to share their experience with us. This demonstrates the impact of people power, and the importance of organisations, like us, who stand up for the rights of the everyday consumer," says Consumer NZ chief executive Jon Duffy.

Tips for making a claim

Anyone whose travel was disrupted in the first three months of 2023 due to mechanical failures with the Interislander should be contacted by Interislander.

If you were impacted, and you haven't heard from them yet, get in touch with them via Interislander’s Request a refund portal.

To make the process easier, collect all your receipts from the event. If you didn’t keep any, get in touch with any rental car company, airline, petrol station or accommodation provider you used at the time and ask for copies. If they don’t have records back that far, check your bank statements for evidence of what you paid and take a screenshot.

You can also calculate your vehicle’s mileage using Inland Revenue’s kilometre rate table – it’s not just about fuel but wear and tear to the vehicle, too: IRD kilometre rates 2023–2024.