A new travel reimbursement scheme announced by the Government will help ensure Kiwi travel agents remain on the frontline to assist New Zealanders, an industry leader says.
The COVID-19 pandemic has essentially shut off international travel and caused Kiwis to cancel their plans and request either refunds or credit. It's estimated around $690 million of Kiwis' money is locked up with overseas travel and tourism suppliers.
Kris Faafoi, the Minister of Commerce and Consumer Affairs, on Tuesday revealed a scheme that will pay travel agents a percentage of cash refunds they are able to recoup.
"The Government’s been working with the sector to find a way to help agents assist their customers to get back money that they are owed by travel suppliers," Faafoi said.
"We will provide a consumer travel reimbursement scheme to assist the return of credits to New Zealand consumers via travel agents. The scheme will be funded to a maximum of $47.6 million."
Agencies will be paid 7.5 percent of the value of cash refunds and 5 percent of the value of credits secured on behalf of consumers.
"This will mean, for example, that if an agent recoups $10,000 in a cash 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 cancelled travel, the customer gets the credit and the agent receives $500."
The reimbursement is intended to pump some money into the industry currently struggling due to the lack of demand for overseas travel.
Brent Thomas, House of Travel's commercial director, told The AM Show that due to pandemic - which has resulted in countries shutting their borders and some putting into place quarantine measures - there are very few outward flights.
"Typically at this time of the year, we would be dealing with somewhere around about 100,000 - 200,000 people leaving the country in any one month. Right now, it is just a few handfuls… the only people who are heading overseas typically at this stage are people who are heading on a one-way trip back to their homeland or who have got some special event to go to."
Thomas said the new reimbursement scheme was a "big help" and he appreciated Faafoi for recognising travel agents' efforts over the last six months in trying to help consumers get refunds or credit while working for little to no income.
"What it recognises is that we have costs going forward to be incurred by the industry and we need to make sure we have the expertise to help the New Zealand consumer to get these refunds and credits in place," Thomas said.
"A number of us in the industry have recapitalised. So, we have gone out and got new shareholder funding to get us through this period. What this does is it allows us to keep those people on the frontline and in the wholesale companies. We've have got the expertise to help the New Zealand consumer."
He said if New Zealand loses its frontline agents or suppliers, Kiwis will have to deal with those in "far-flung parts of the world" to get their refunds or credit - and that's "very, very tricky".
"It's very difficult and also, you may be dealing with, say, a company in Germany for instance and they are a different time of the world and you going to be one of tens of millions, whereas if you ring your travel agent, you are a personable person that we know and we want to look after, one on one."
Faafoi says the scheme will "increase the likelihood of consumers recovering refunds and credits owed to them".
"It will also give greater confidence to the travel industry by limiting further insolvencies."
The scheme will be established as soon as practicable, with eligibility details being worked through.