The collapse of a travel agency popularised for its low-cost flights and adventure tours has left hundreds of Kiwi travellers out-of-pocket and desperately seeking refunds.
New Zealanders eagerly anticipating the trip of a lifetime are now only awaiting answers as thousands of dollars hang in the balance. STA Travel - a popular choice among students for its competitive rates - collapsed earlier this year after declaring insolvency amid the ongoing COVID-19 pandemic.
Now, the former company is facing an ever-increasing list of creditors hoping for the return of their hard-earned cash. Despite early promises that devastated customers would be refunded the cost of their dream holiday, many are resigned to the fact they may never see their savings again. It's estimated around $690 million of Kiwis' money is locked up with overseas travel and tourism suppliers.
The company's collapse is a crushing blow for struggling students, young couples and homeowner hopefuls, many of whom cannot afford to lose thousands of dollars.
"Our trip was cancelled and we have lost $6000 towards a house," 21-year-old student Morgan McLiver-Grant told Newshub. McLiver-Grant and her 22-year-old partner had booked a dream trip to Hawaii as a treat while saving for their first home.
She says STA Travel had promised the couple a refund for the holiday in March - but they never received it.
"It is really disappointing seeing pretty much our life savings being stolen from us when we were promised a refund," she said. "Our money will most likely never be seen again."
The agency was officially placed under voluntary administration in August, appointing Deloitte heavyweights Colin Owens and David Webb as responsible for STA Travel's staff, customers and suppliers.
According to the agency's website, an urgent assessment of the company's financial position has been undertaken, determining the viability of recapitalisation or an asset realisation strategy to recoup funds to pay customers and creditors. A Deloitte spokesperson told Newshub that a watershed meeting, to be held at the end of September, will ultimately decide the future of the worldwide STA Travel Group - with one of the options being liquidation.
However, unsecured creditors - customers who are owed refunds - will be the last to be paid if any money does become available.
"Creditors are anyone that can show they owed money by an insolvent business. Creditors are ranked, from secured creditors (like banks with mortgages) to unsecured creditors (customers owed refunds)," Consumer NZ chief executive Jon Duffy told Newshub.
"As money becomes available, creditors are paid according to their rank. Unfortunately unsecured creditors are paid last."
He confirmed Consumer NZ has been inundated with complaints and questions from outraged STA Travel customers, with many claiming they never received the refunds or credit that had been promised to them.
"They feel misled," he told Newshub.
The agency's website - which has been replaced with an insolvency notice - says: "Due to the current circumstances we are not currently in a position to offer any cash refunds [or] honour any credit for cancelled trips."
A recent graduate and North Shore Hospital nurse is "absolutely heartbroken" after postponing her dream trip to work throughout Auckland's COVID-19 outbreak cost her more than $6000.
When the deadly coronavirus found a foothold in New Zealand, the 22-year-old - on the assurance of STA Travel - decided to reschedule her trip to Cuba and Peru.
"I chose to stay and work throughout the COVID-19 [outbreak]," she told Newshub.
Believing she would be able to take her trip - initially scheduled for March and April - at a later date, the young nurse continued to work throughout the outbreak. Yet when STA Travel suddenly announced their insolvency, she says customers were left in the dark.
"They made no effort at all to inform me of the situation. I did a quick Google search and found out what had happened," she said.
She says customers were referred by the Deloitte administrators to an online form declaring their status as an unsecured creditor - but the process was confusing and full of legal jargon.
Deloitte also recommended customers to contact the tour companies and airlines they had booked with. The company's insolvency notice similarly advises customers to contact their airline, hotel or travel operator to discuss the possibility of having the payments refunded.
However, many companies say their hands are tied. In the 22-year-old's case, both Latam Airlines and tour company G Adventures said they couldn't issue refunds to her directly as she had booked through STA Travel, a third-party.
Now, she says it's clear any chance of a refund, credit or compensation is "very unlikely".
"I feel absolutely heartbroken that this has happened, I don’t understand how this is legal. It took a very long time for me to save for that trip," she told Newshub. "I feel pretty hopeless at the moment."
Auckland University student Maria, who had purchased plane tickets with Singapore Air via STA Travel, said the agency assured her a refund would be processed within six months after the flights were cancelled due to ongoing travel restrictions amid the pandemic.
Maria says she and her husband last had contact with the agent in early June, and only found out about the insolvency this week.
After contacting Singapore Airlines, the carrier advised the couple they had already refunded the cost of their flights back to STA Travel on June 12. They say they never received the money.
"This is daylight robbery. We are so shocked. My husband and I just had a baby and are on a single income. We heavily relied on this refund to help us get through my maternity leave," Maria told Newshub.
"The whole situation is a shambles. People have been robbed of their hard-earned money with no prospects of having it back."
The administrators told Maria to complete the creditor claim form, but advised her in the email that it's currently "unknown" whether refunds are even possible.
Recent Victoria University graduate Liana Cook Auckram, 25, claims she was also told she would receive credit for her six-week trip to Egypt, Jordan and Turkey, worth around $8000.
"STA Travel told me my credit was sitting directly with the operators after I was declined a refund," she told Newshub.
"My airlines and tour companies have [since] confirmed that no money was handed over to them from STA Travel, despite what my agent told me."
Travel reimbursement scheme unhelpful
A new travel scheme designed to pay travel agents a percentage of the cash refunds they are able to recoup is also unhelpful, according to STA Travel customers.
Announced last Tuesday by Kris Faafoi, the Minister of Commerce and Consumer Affairs, the scheme aims to help travel agents with getting money owed by travel suppliers back to their customers. 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," Faafoi explained.
However, the new scheme does not apply to companies that are insolvent.
Speaking to Newshub, the 22-year-old nurse says an extension to the scheme to include STA Travel customers is her last hope at receiving a refund or credit towards her trip.
"[We] arguably need the financial support much more than others, who are able to rely on their travel agencies to process the refunds for them. We are left with no one to contact about getting refunded, and are left thousands of dollars out of pocket," she said.
She and Auckram agree it appears younger Kiwis have been unfairly and disproportionately impacted by the insolvency, due to STA Travel predominantly targeting students.
"The STA Travel community was one mainly composed of young travellers and students. I believe we are being [ignored] because we are young and the majority are working entry-level jobs," the nurse said.
Auckram says she feels "deceived" by the agency.
"Younger people do not understand the legality around refunds and flight credits. Losing $8000 is financially devastating."
In a statement to Newshub, Deloitte confirmed approximately 200 creditors attended an STA Travel meeting on September 3.
"The administrators' priority continues to be to secure data and information and continue their investigations with a view to understanding what is possible to help affected parties," said a spokesperson, adding that a report will be published for affected parties in mid-late September.
"In addition to securing data and reconciling STA booking information, the administrators are exploring options under various Government support schemes, with a view to identifying further support, if any, that can be made available to affected parties.
"The administrators confirm that current claims received for all companies across the STA Travel Group, which includes STA Travel (NZ) Ltd, IEP and NNS, total more than $7 million with this number growing as a result of more parties contacting the administrators."
In an email obtained by Newshub, the administrators indicated that the possibility of customers ever receiving their refunds was unlikely.
"At this stage it is unknown whether there will be any ability for creditors refunds/credits to be repaid."