STA Travel collapse: Could other agents step in to help?

Travel agents getting Government support could help New Zealanders caught up in the collapse of STA Travel, but say it would be complex chasing up funds for clients of another business.

Administrators say STA Travel owes at least $7 million, and some of the hundreds of New Zealanders who booked through it say they are out of pocket by tens of thousands of dollars.

Under an incentive scheme announced on Tuesday, agents will be paid up to $47.6m to chase up an estimated $690m held by suppliers overseas.

Flight Centre NZ managing director David Coombes was part of an industry group that negotiated with the Government and said customers of STA, now in administration, could benefit from wider sector expertise.

Deloitte is handing the administration of STA - which was not a member of the Travel Agents Association of NZ - and he said other surviving agents could be willing to help if called on.

"My view is right now that this is firmly in the hands of creditors — nobody would be able to step in without the data and there are privacy issues, but there would be a willingness in the industry to talk to creditors and see if there is a way we could get through this," he said.

"If they think there is a pathway to utilise who is viable in the agency sector to reach out [but] it's a complicated issue."

Deloitte has been approached for comment. After an initial creditors' meeting last week, the firm said current claims received for STA Travel (NZ) total more than $7m and that was expected to grow.

One STA customer who contacted the Herald said her faith in travel agents had been shaken by the collapse, which risked $6000 she had with the firm.

Coombes said the Government scheme would give surviving agents some breathing space.

Flight Centre NZ managing director David Coombes. Photo / Greg Bowker

The consumer travel reimbursement scheme will help the return of credits to New Zealand consumers via agents. It is estimated close to $700m could be at stake.

Travel agencies will be paid:

• 7.5 per cent of the value of cash refunds.

• 5 per cent of the value of credits successfully secured on behalf of consumers.

If an agent recoups $10,000 in a refund on cancelled travel, the customer gets that money back and the agent will receive $750. If it's a credit for the $10,000 of cancelled travel, the customer gets the credit and the agent receives $500.

Coombes said the scheme was not big enough to save all of what is left of the industry and that wasn't the Government's intention.

"What it represents is a small amount of income in an industry that has zero income to cover the costs of carrying on the job of returning refunds for customers and redeeming their credits," he said.

"This provides a few months' breathing room for the industry to continue to right-size in the face of completely unforeseeable circumstances and make sure we can continue to do our job for the customers."

It is estimated that travel agents handled about $6 billion in bookings last year and although margins are slim, the travel industry had been booming before Covid-19.

"We were year-to-date profitable in February; by the time we got to the end of June, three years of profit has evaporated."

About 5000 people worked in the sector at the start of the year.

"I would say we'd be lucky to have half left and I'm not convinced that won't shrink even further."

Agents were dealing with some very upset clients.

"A lot of customers don't understand that we don't hold the cash, the supplier does, and if the supplier says their policy is a credit, we can't offer a refund because we don't have the cash to do that," Coombes said.

Some of those suppliers are in administration and across the travel sector firms are understaffed and struggling to process customer inquiries.

"None of the systems are engineered to work in reverse."

Agents were also fielding inquiries from people who had booked through online travel agents, which were difficult to contact and could provide little help.