New scheme launched to help Kiwis get $690 million worth of refunds for cancelled travel

Travel agents will be paid a fee for every refund processed.
Travel agents will be paid a fee for every refund processed. Photo credit: Getty Images

New Zealanders who have money locked up offshore due to cancelled travel plans as a result of COVID-19 are set to benefit from a new government scheme, announced by Kris Fafoi on Tuesday.

"We know the travel sector and their customers have taken a massive hit due to the disruption caused by COVID-19. 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," Commerce and Consumer Affairs Minister Kris Faafoi said.

The consumer travel reimbursement scheme has a budget of up to $47.6 million and will assist Kiwis trying to obtain refunds or credits for COVID-19 affected travel plans from overseas operators. 

Travel agencies will be paid: 

  • 7.5 percent of the value of cash refunds
  • 5 percent of the value of credits successfully secured on behalf of consumers
  • For example, 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 a travel agent secures a credit for the $10,000 cancelled travel, the customer gets the credit and the agent receives $500

Data from the travel sector and the Ministry of Business, Innovation and Employment estimate around $690 million of New Zealanders' money is locked up with overseas travel operators due to COVID-19.

"We want to get that money back for Kiwi customers and into the local economy as quickly as possible. The scheme we are announcing today will help those in the travel industry with financial support to facilitate the recovery of those funds," Faafoi said.

A statement released by a group who have been pushing for support from the government, including David Coombes from Flight Centre NZ and Mark O'Donnell from House of Travel welcomes today's announcement. 

"This is good news for our industry. There's still a long road ahead but we're pleased to be getting some much needed support in what has been an incredibly difficult time for travel agencies in New Zealand. 

"Our people have been working tirelessly over the past six months to repatriate funds from travel suppliers into the hands of Kiwis. This funding will allow us to recoup some of the costs involved in that lengthy process," the statement said.

Until now, travel agents have been attempting to obtain credits and refunds without any possibility of commission, as the travel industry shrinks.

"I know that travel agents and wholesalers have been working hard to recover refunds and credits owed to New Zealand consumers, but are under severe financial pressure, with many facing the prospect of insolvency. 

"The travel reimbursement scheme will help 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," Faafoi said.

As yet, there is no launch date for the scheme, as the government works with the industry to work through details such as customer refund eligibility.