Kiwi travellers fighting for their money back as collapsed STA Travel creditors’ list grows

Wellington woman Liana Cook-Auckram was meant to go on a trip of a lifetime to the Middle East after graduating from university.

Liana Cook-Auckram. Source: Supplied

But now, she’s struggling to get the $8000 she spent for the trip back from travel agency STA Travel. 

“This is just a ridiculously stressful situation under the current climate of Covid-19,” she said.

Cook-Auckram is one of hundreds of Kiwis left out of pocket after the New Zealand arm of the international STA Travel Group went into voluntary administration.

She booked her trip last year and was meant to leave on March 25, the day the country entered Alert Level 4 lockdown. 

In the lead up to March when it was looking like her trip would be cancelled because of the pandemic, Cook-Auckram said she was in “pretty regular contact” with her Wellington-based STA travel agent.

“She gave me the advice at the time to wait for my tours and flights to be cancelled to be entitled to a full refund instead of cancelling in advance when it could still technically go,” she said.

According to Cook-Auckram, the travel agent then told her she could only get credit, and not a refund, for her cancelled trip.

“She reassured me that [travel supplier] G Adventures that I booked through was offering 110 per cent credit to affected customers," Cook-Auckram said.

"It actually made me feel better at the time even though I felt a little bit pressured to rebook because I couldn't get my refund. 

“In July, I contacted my agent again because it was rescheduled for August and it was, again, looking increasingly unlikely.

"She informed me again that I couldn't get a refund and that I could get a 24-month credit from August 2020.”

She said she was reassured by STA at the time that her credit was safe. 

1 NEWS has seen emails from STA to Cook-Auckram supporting these claims. Numerous other travellers have also reached out to 1 NEWS and said they were in a similar situation.

Since hearing of STA going into voluntary administration, Cook-Auckram said she had tried multiple times to get her money back through her bank and through her airline and travel suppliers, with little luck. 

Deloitte’s David Webb and Colin Owens were appointed as administrators on August 24. Three days before, Swiss-based STA Holdings AG, STA’s parent company, announced it was filing for insolvency.

In a statement to 1 NEWS, Deloitte said more than 200 creditors attended its initial creditors’ meeting. It said the list of the company’s creditors was growing. 

In total, more than $7 million was owed by STA Travel Group, which includes STA Travel (NZ) Ltd, IEP and NNS. 

Deloitte said its priority as administrators was to get data and information to continue investigations “with a view to understanding what is possible to help affected parties”. It said it was exploring its options under various Government support schemes to see if there was any further support available for those impacted. 

Another creditors’ meeting is set to take place at the end of this month to decide the future of STA Travel, including voting on whether it goes to formal liquidation.

Multiple attempts by 1 NEWS to contact STA Travel have been unsuccessful.

Jessica Wilson, Head of Research Consumer NZ, said it was unlikely customers would get their money back from the travel company as they were unsecured creditors. She said Consumer NZ had been fielding daily calls from STA customers, some thousands of dollars out of pocket.

She said complaints about the STA’s refund policy dated back to March when it was alleged STA was not passing on the refunds it had been getting from airlines back to customers. 

“It did subsequently change that policy,” Wilson said. 

“But, in the last couple of months, the issues that have been coming up are consumers who are entitled to their money back being told by STA they will get it. 

“But, that’s obviously not happening and the financial problems of the company have contributed to that.”

Wilson said because STA Travel wasn’t part of the Travel Agents' Association New Zealand which had some financial guarantees to pay for its members, refunds were even less likely.

She also said it was “very unlikely, given the circumstances of the company going into liquidation and the state of the travel industry at the moment” that STA Travel could get back up and running. 

Some consumers may find they are unable to get chargebacks from their banks or travel suppliers if they had already refunded STA travel, Wilson said.

“It might be possible that the money will be sitting with the administrators.”

Wilson said changes to legislation could help to prevent similar situations in the future.

“One key change that is needed is to ensure that when travel or flights are cancelled, consumers get their money back,” she said.

“Travel agents would have been refunded early on and passed that money back to consumers. The issue we've had with our legislation is that it doesn't require Air New Zealand to refund in cases where flights are cancelled for reasons outside the airline's control.

“In the case of travel agents, if they were required to contribute to a financial guarantee scheme, consumers would have much better protection.”

As for the Government’s announcement on Tuesday that it would incentivise travel agents to return customers’ money back by paying them a percentage on top of the refund, Wilson said while not applicable to STA as it was in administration, she was hopeful it would make a difference for other travellers. 

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Officials estimate about $700 million of New Zealanders’ money is locked up because of travel cancellations. Source: 1 NEWS

A Commerce Commission spokesperson also confirmed to 1 NEWS it had opened an investigation into STA Travel’s New Zealand arm “over alleged misrepresentations as to rights to refunds”.

“However, we note that the company is no longer trading. So, we are looking at whether any further action is appropriate,” the spokesperson said.

The spokesperson said while it had not issued advice to consumers specific to STA Travel, it had issued general guidance for people whose travel had been affected due to the pandemic and urged creditors to check Deloitte’s website

A Ministry of Business, Innovation and Employment spokesperson also advised people who had made bookings with local travel agents who have since become insolvent to contact suppliers, airlines and banks directly about refunds or credits.