Covid 19 coronavirus: STA Travel insolvency makes for anxious wait for would-be travellers, 'worst nightmare' as tens of thousands at stake

Robbie Skilton with his wife Alison at their home in Torbay, Auckland. Photo / Greg Bowker

A family who spent nearly $40,000 on a stymied world trip are among Kiwis who now fear they've lost money after the parent company of STA Travel New Zealand filed for insolvency.

And Consumer NZ is warning STA customers they will be treated as unsecured creditors and may never see their hard-earned cash.

Robbie Skilton, who lives in Auckland's Torbay, was expecting to get a refund of nearly $40,000 after a holiday had to be cancelled because of Covid-19.

Skilton, his wife Alison and their two adult children all booked with STA Travel last year for a 5-month international excursion.

The main drawcard was a wedding in Scotland but included travel in central Europe and America.

"It was an extensive trip, we were doing things we didn't have time to do in the past," said Skilton, 69, recently retired.

He claimed a STA Travel website used to say refunds from providers would be passed on to customers and that he was told the same thing on the phone.

In March, via email he was told the company position on refunds was to offer a credit note - something the Skiltons repeated they were not happy with.

Later emails from an agent acknowledged he had previously been told refunds were possible but said as things had changed drastically they could only rebook or hold credit.

He was gutted to hear the parent company STA Travel Holding AG had filed for insolvency.

"I said to my wife that is our worst nightmare."

There was now an information void and he said he was concerned for other STA customers. Jacqueline Engelbrecht and her husband Greg, who live in Army Bay in Whangaparaoa, spent three years saving to pay for a family trip to Japan.

Countless weekends were spent researching and practising Japanese with their 9-year-old son Daniel, rather than going out.

The family paid a year in advance to ensure the trip aligned with the blooming of cherry blossoms.

Greg and Jacqueline Engelbrecht with their 9-year-old son Daniel. Photo / Supplied

Their STA Travel booking included The Dragon Trip, a nearly two-week tour from Tokyo to Osaka and Kyoto.

The total cost of the vacation including flights, the tour and day excursions came to about $19,000.

In March, after the pandemic hit, their agent confirmed STA Travel had received a refund on most of their items, with an exception of the tour.

In May, Engelbrecht, who works in recruitment, emailed asking for some kind of refund.

"During this challenging time, we are doing our best to mitigate the impact of Covid-19 on our customers and suppliers that we work alongside," STA Travel replied in an email.

"In order to do so we are trying to adapt and follow advice from airlines, land partners, local governments, regulators and travel trade bodies internationally."

Therefore credit measures had been taken to address the situation in the "fairest way possible".

Engelbrecht was concerned to read in the Herald that a Christchurch couple who booked a trip with STA feared they could be $20,000 out of pocket.

When the parent company had filed for insolvency last week it had reportedly said the pandemic had "brought the travel industry to a standstill".

While the parent company in Switzerland was affected, local operations by STA Travel "may continue around the world", it read.

Engelbrecht fears they might never see their money again.

"It's been a bit of a rollercoaster. Sometimes, I think it will great when we can travel again we will have this trip that will be ready and waiting for us but I think it's false optimism.

"It was a lot of saving and hard work. It's pretty devastating to be honest."

Many other couples, families and groups are also feeling left in the lurch.

Jennifer Allan, a gym manager in Hawera, said she was a part of a group of nine who had booked with the agency to go to Fiji to celebrate a friend's 40th in May.

Jennifer Allan. Photo / Supplied

Allan and her husband spent close to $3000 on the trip.

The group was told they could not get a refund and were instead given a two-year credit, which Allan was not happy with.

It did not seem fair during a pandemic, she said. "Travel isn't going to be safe for a long time."

Auckland couple Christine and Ross Blue spent just over $16,000 on business-class flights with STA Travel for a five-week trip to France.

The couple, who live in an Ellerslie retirement village, said towards the end of July their agent confirmed they had received a refund from Emirates.

They were told it could take 60 days for the refund to go through, as of yet the money has not reached their bank account.
The couple had earlier asked about what would happened to the money if STA Travel ceased trading but were told not to worry.

Christine Blue said: "My question is what have they done with our money? It wasn't theirs to keep."

Attempts by the Herald to reach STA Travel, including by email and phone, have been unsuccessful. Its nz website is "down for maintenance".

Today the companies register showed the New Zealand arm had appointed Deloitte in Auckland as a voluntary administrator.

Consumer New Zealand's CEO Jon Duffy told Newstalk ZB this morning because STA isn't part of the New Zealand Travel Agent Association, some people might not get any money back.

He said those who had booked travel with the company were unsecured creditors, meaning they would have to wait their turn.

Duffy said it might not be possible for some people to get their money back directly from the travel agency.

He advised people to go directly to the travel providers they booked with or through their bank if they paid with a credit card.