Interislander paying additional costs of passengers caught up in 2023 mechanical failure

In early 2023, the Interislander had faced a series of issues. The Kaitaki lost power in January, “engineering issues” left passengers stranded the following month, and in March there were yet more engineering problems.

Eric’s* cousins had flown into the North Island a few weeks earlier from the United Kingdom, and Eric and his wife had headed across on the ferry with them to do a tour of the South Island.

While the family were walking down Arrowtown’s main street they got a call from the Interislander. Their ferry sailing, booked for a few days’ time, had been cancelled.

“Oh bugger, they’ve kicked us off the ferry, and we’ve now got a ferry four days later than we were booked,” Eric said, recalling the event.

The main issue was that Eric’s cousins were due to fly out of the country before the rescheduled ferry booking.

“We had to scramble, because we had to get my cousin and his wife back to the North Island to get their flight back to the UK.”

Eric booked himself and his cousins as foot passengers on the ferry for the following day, leaving his wife with the car in Picton to wait for another booking. But just as they drove into Picton, they got news their rebooked sailing had been cancelled because of bad weather.

They tried to get flights from Blenheim to Wellington, but there weren’t any available.

“It was like Monty Python, with my cousins looking at me like this was a third-world country,” Eric said.

They swung back out of Picton, and Eric’s wife drove for 6 hours to get them to Christchurch airport, where flights to the North Island were available. She dropped them at the airport, then turned straight around to make the journey back to Picton to wait for a ferry crossing that could take the car.

All up, Eric was left out of pocket just over $2,000, with the extra accommodation, petrol and flight costs. He applied to KiwiRail, which runs the Interislander, for compensation, but his claim was denied.

An Interislander customer contact specialist told him: “Unfortunately, the issues that arose from your cancelled sailing were not foreseeable and were outside Interislander's control.”

So, it came as a bolt from the blue when, in December 2024, Eric received full reimbursement for all his expenses.

Breaching consumer rights

While the Interislander offered refunds or alternative sailings to customers impacted by mechanical events, it refused to cover the cost of alternative transport to get customers to their destinations, or accommodation.

At the time, the Interislander claimed it wasn't liable for other travel or accommodation costs its passengers incurred as a result of a mechanical breakdown.

However, under the Consumer Guarantees Act (CGA), a service must be provided with reasonable care and skill and be fit for purpose. If a service doesn’t meet these requirements, consumers are entitled to a remedy, including damages for losses resulting from the failure.

By not compensating passengers for costs they incurred as a result of a mechanical failure, we believe KiwiRail was breaching the CGA. We also think it was breaching the Fair Trading Act (FTA) by misleading customers about their rights to compensation.

We complained to the Commerce Commission in February 2023, asking it to investigate.

With passengers now being refunded, we asked the Interislander whether this was because of the Commission’s investigation.

Interislander’s executive general manager Duncan Roy said:

“We recognise it is not a good experience for disrupted customers to have to wait for the outcome of an investigation to be compensated, so we have changed our processes. If you travel with Interislander and you are disrupted because of a mechanical event, Interislander will cover reasonable additional costs arising from that disruption.” 

He added that there was a “comprehensive investigation …[and] the Interislander has now determined that the cause of the incident was within Interislander’s control and therefore those who incurred additional costs due to the disruption are entitled to compensation under the Consumer Guarantees Act.”

Roy said Interislander was proactively getting in touch with passengers who were impacted by the January 2023 incidents, and other incidents where the criteria apply.

While we’re still awaiting the full outcome of the Commission’s investigation, we’re very pleased the Interislander has updated its terms and conditions and is now reimbursing people who incur additional costs when their ferry sailing is disrupted due to mechanical problems.

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.

Here’s some tips to help smooth the process of making claim:

• Collect all your receipts from the event. If you no longer have them, get in touch with the rental car company, airline, petrol station or accommodation provider 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.
• 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.

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*Name changed to protect privacy