Frustrated travel agents say the refusal by the Government to tweak an industry reimbursement scheme could cost Kiwis owed refunds or credits hundreds of millions of dollars.
The Travel Agents Association of NZ (Taanz) has been in lengthy negotiations with cabinet ministers and the Ministry of Business Innovation and Employment but is exasperated at the lack of progress on what they say are simple modifications to the scheme.The association has now gone public with its concerns.
Last year the Government committed $47m to a scheme to incentivise agents to recoup funds for travellers – and help give some support to remaining agents in the sector devastated by Covid-19.
MBIE estimated about$690 million of New Zealanders’ money was locked up from cancelled travel plans due to Covid-19, with about 85 per cent ($586m) related to international travel.
Since October the Consumer Travel Reimbursement Scheme has paid out $27m to travel agencies and wholesalers to recoup $245m in refunds and $190m in credits, according to figures from the Minister of Commerce and Consumer Affairs: David Clark’s office.
While the scheme has been extended from the end of June to the end of the year, Taanz president Brent Thomas said more important adjustments need to be made to help ensure Kiwis got what was owing to them.
There was still $20m to incentivise agents to chase credits and refunds and what Taanz wanted was commission paid out on credits to be processed raised from 5 per cent to 7.5 per cent and the scheme backdated from August 14 last year to June 5.This would widen the scope for more overseas holiday funds to be chased up and provide a better return to agents from the remaining $20m that has already been allocated.
”They will say they’ve ticked the box by extending the scheme and listened to us but they haven’t. What they’re effectively saying it should be adequate in terms of support.”
Agents have said the MBIE estimate of funds held overseas is an underestimate and Thomas said there could be up to $500m outstanding.
By the Government’s figures, there is still more than $150m outstanding.
Thomas said the number of travel agents had plummeted from about 5000 before the pandemic to about 1500.
”All we’re trying to do is access it so we can get as many of our 1500 members using their expertise to help get money back. We’re still going to be around but there will be fewer of us to help the New Zealand consumer,” he said.
“We know all sorts of sectors have been impacted by Covid – we aren’t asking for more money. We are just asking for access to what the Government has already allocated the industry.We just want some common sense applied here.”
He said the industry had been grateful to the Government for originally setting up the scheme but so far ministers and MBIE had been totally unwilling to consider any of the changes his association had put forward.
“Instead they have just extended the scheme for six months, which we have reiterated in multiple letters and meetings simply won’t solve the issue. Frustratingly, they agree the scheme has been a great success and that it would be good for consumers if the remaining $20m was used; but they won’t consider anything that will actually make that happen.”
When asked about the agents’ concerns, Clark through a spokesman did not address the tweaks that had been requested but outlined the time extension.
”The Government has chosen to extend the scheme in its existing form toDecember 31, 2021, enabling travel agents and wholesalers to continue to recover funds owed by overseas travel companies,” the minister said.
The scheme was launched in October 2020 and pays New Zealand-based travel agents 7.5 per cent of the value of all cash refunds they are able to successfully recover for their customers and 5 per cent of the value of all credits successfully secured or rebooked for international travel.
Thomas said there was no extra charge to the client for the ”significant” amount of extra work done by the travel agent on refunds and credits.The agent does keep the original commission as that income reflects the work done on the original booking.
The compensation paid through the scheme to the travel agent is less than the actual cost incurred however it does help cover some of the costs such as wages of the staff.
Thomas said agents were experienced at handling complex refund cases and had succeeded in getting money back for clients who may have spent $20,000 on a holiday they saved a decade for.
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