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Minister of Commerce and Consumer Affairs Kris Faafoi New Zealanders who have money locked up abroad due to canceled travel plans as a result of Covid-19 will benefit from the new scheme to support the recovery of refunds and credits from travel providers abroad .
“We know that the travel industry and its customers have been hit hard by the disruption caused by Covid-19. The government has been working with the industry to find a way to help agents help their customers recover the money owed to them by travel providers, “he said.
The Government would provide a consumer travel reimbursement scheme to help pay back credits to New Zealand consumers through travel agencies.
The plan will be financed with a maximum of 47.6 million dollars.
Travel agencies will be paid:
- 7.5 percent of the value of cash refunds and
- 5 percent of the value of credits successfully secured on behalf of consumers.
If an agent recovers $ 10,000 in a refund for a canceled trip, the customer recovers that money and the agent will receive $ 750. If it is a credit for the canceled trip of $ 10,000, the customer gets the credit and the agent receives $ 500.
Since the border restrictions were imposed, hundreds of agents have lost their jobs and their businesses have failed.
Last year, Kiwis spent between $ 7 billion and $ 9 billion on trips abroad, much of which was through agents who charged a commission. This almost completely stopped in March, when global leisure travel ended.
The travel sector and the Ministry of Business, Innovation and Employment estimate that around $ 690 million of New Zealanders’ money is blocked due to Covid-19 canceled trips.
“We want to get that money back for Kiwi customers and for the local economy as quickly as possible. The plan we announced today will help those in the financially supported travel industry to facilitate the recovery of those funds,” Faafoi said.
“I know travel agents and wholesalers have been working hard to recover refunds and credits owed to New Zealand consumers, but they are under severe financial pressure, with many facing the prospect of insolvency.”
Many of the pending reservations that remain stagnant were complex to implement and difficult to disconnect.
“That’s where industry expertise is crucial in helping consumers recover money tied up in reserves.”
“The travel reimbursement plan will help increase the likelihood that consumers will recoup refunds and credits owed to them. It will also increase confidence in the travel industry by limiting additional bad debt.”
Faafoi said the plan will be established as soon as possible, and details like eligibility will be worked out in the coming weeks.
Agents were also entitled to the wage subsidy scheme.
Before the pandemic, they employed more than 5,000 people across New Zealand.
The agents put aside traditional rivalries to press for government support and the negotiating group consisted of: David Coombes (Managing Director of Flight Center NZ), Mark O’Donnell (CEO of House of Travel), Malcolm MacLeod (CEO of First Travel Group) and Simon McKearney (CEO of Helloworld).
“This is good news for our industry. There is still a long way to go, but we are pleased to receive the much needed support in what has been an incredibly difficult time for travel agencies in New Zealand,” they said.
“Our people have been working tirelessly for the past six months to repatriate funds from travel providers at the hands of the Kiwis. This financing will allow us to recover some of the costs involved in that long process.
While the borders remain closed, the industry faced a struggle but the support gives it a breathing space.
The group said they were grateful to Faafoi and recognized the work of Kirk Hope (CEO Business NZ) and Rob Fyfe (Former CEO Air NZ & Business Advisor to Jacinda Ardern).
