Thanks for the replies. Just to add more detail, I wasn't the flyer, we had paid for the elderly Mother-In-Law to fly TUO-AKL-TUO for the weekend as she won't drive in AKL and she can think of better things to do than spend time getting motion sickness on an Intercity Bus. The same weekend I was in Europe and had a cancelled flight and got about $1500 refunded after I was downgraded to Economy for part of my journey in order to get home, thanks to EU261

I can see the clause in Air NZ conditons of carriage but it irks that I have paid the extra for a premium product (a flight), and instead been given the no-frills product (a bus ride). Its like doing the online shopping, asking for steak and being told, sorry we are out of steak, here is some mince. No partial refund because we have satisfied your hunger.