Back in the early days of the pandemic, airlines were routinely cancelling flights and refunds were often delayed or offered as travel credits for future flights. This is not acceptable, someone stuck overseas may have limited funds available on their credit card and might need to buy a ticket on another airline. Future travel credit is no good if you aren’t going to fly on the same airline in the foreseeable future, eg Air New Zealand ticket bought to attend a wedding in Auckland.
However, airlines need certainty about numbers before they schedule flights therefore a system whereby funds are blocked on the customer’s credit card and only released once the flight has taken place would be reasonable to both parties. The customer gets charged if he has booked but doesn’t take the flight, which stops people making bookings with multiple airlines to try their luck. The funds get unblocked if the airline cancels so that the customer can immediately try an alternative.
It’s fair to both sides.