The customer rights organisation says that even those with non-refundable tickets were now prevented from travelling many places, for when they had booked through no fault of their own and the airline was better placed to wear the financial loss and refund them.
But Air New Zealand is today on the front foot over its policy on non-refundable flights, often less expensive Grabaseat fares; it is not legally obliged to pay back cash.
The airline says there would be tens of thousands of potential refunds and if was to ''open the floodgates'' it would further jeopardise its already shaky financial position.
Chief revenue officer Cam Wallace said it was trying to preserve cash rather than release it even though it had a $900 million Government loan it could call on.
''If we were to open the floodgates and refund those that would accelerate the requirement to use the loan and we would have to make some even more aggressive changes to our cost base.''
While he would not disclose how much paying out the non-refundable tickets would cost, it could be close to $100 million.
Wallace would say the impact on the airline would be ''significant and material''.
Air New Zealand has laid off 4000 of its 12,500 staff and park up much of its fleet as travel restrictions here and around the world have brought air travel to a near standstill.
''When you've got such a small trickle of revenue coming in the door it just doesn't add up - we've got to make some calls,'' he said.
The airline was aware of the fallout.
''We are concerned about customers and we are concerned about the brand impact.''
Following a Consumer NZ complaint to the Commerce Commission, Air NZ refunded tickets bought in the United States or for travel through that country and done the same for those booked to Argentina, a country it is no longer flying to.
''We hope that Kiwis understand the impact of this event on the aviation sector and specifically Air NZ - this is an unparalleled event in history and hopefully a once-in-a-lifetime occurrence. We have been destroyed in terms of our revenue and we're trying to manage our way through it,'' he said.
In a letter to Consumer NZ, Wallace said that for all non-refundable airfares on cancelled flights it had taken the ''extraordinary step'' of proactively placing these into credit.
"We are also enabling customers who have not had their flight cancelled to elect to receive a credit if they do not wish to fly. For customers with a fare credit, we have increased the level of flexibility to use that credit."
Passenger now have until June 2021 to book with their credit and a further 12 months to complete their travel. And for the first time, credits can be used across several separate bookings.
But Consumer NZ's chief executive chief executive Jon Duffy said the response from Air NZ was not satisfactory.
''One or other of the parties has to wear the loss and consumers are in the weaker position.''
He said the airline had access to funds and could use those or alternately the Government, which already owns 52 per cent of the airline, could step in.
Duffy is meeting with the Consumer Affairs Minister Kris Faafoi to find out what the Government will do about refunds.Regardless, the damage had been done and there had been hundreds of complaints about airlines' behaviour, he said.
''I'm really surprised that they are holding the line against overwhelming public opinion - they've done irreparable damage to their brand.''
Wallace said the airline apologised for the length of time it was taking to process some requests and it was working with travel agents who could redeploy workers to staff helplines.
The airline had also made several hundred refunds to non-qualifying ticket holders on compassionate grounds.
