Travel agents at tipping point - ministers meet over plea for help

Kiwis spend $9b on travel overseas last year. This has now dried up. Photo / 123RF

Travel agents say the sector is at tipping point as the wage subsidy runs out and staff continue to work for nothing to try and reclaim up to $2 billion in credits and refunds for Kiwis who have booked overseas holidays.

The industry employed about 5000 staff pre-Covid and many agents had seen double-digit growth for the past few years but hundreds have been laid off and businesses closed down. Many more will follow as the wage subsidy runs out as many firms have had little or no income for five months.

A petition calling for extra government help for the sector while borders remain closed is due to be presented to Parliament next Tuesday. The petition attracted more than 16,000 signatures and urges the extension of the wage subsidy beyond September for agents, but the industry says if that is not possible any form of support would be welcome.

''The choice to work for free until the border opens or even negative income versus walking away and abandoning our clients is an untenable one,'' says the petition organised by travel consultant Shane Lust.

Flight Centre was the latest firm to announce more redundancies this week and now has a workforce of 600 - half of what it was at the beginning of the year.

Its managing director for NZ, David Coombes, says time is ticking for the industry, which is now shelving traditional rivalries and uniting to lobby the Government for more help.

''It's a critical moment - there is no doubt that we're approaching a tipping point of some level and that's why we are looking for assistance.''

Commerce Minister Kris Faafoi and Tourism Minister Kelvin Davis met last night to discuss the plight of agents and the role they can play in repatriating funds held overseas by operators.

''They'll be directing officials to work with outbound tourism operators to try and find a suitable pathway forward so that New Zealanders are able to access their refunds,'' a spokesman said.

Coombes said the industry had presented the Government and officials information on what it's done to trim costs and details of the complexities in dealing with operators overseas to claim refunds. In many cases, the travel service providers will only deal with agents due to contractual obligations.

He said his own firm had slashed costs by about 70 per cent.

''We've all leaned in really hard on our cost base and done everything we can do but you can only last so long. No business can continue to an unknown time frame with unknown revenue and costs,'' he said.

While there was some domestic leisure and business booking through travel agents, this was only a fraction of commission revenue they earned through international bookings.

The $9b industry

Traditional bricks-and-mortar agents booked the bulk of $9 billion in bookings New Zealanders made overseas last year. They argue they are vulnerable businesses but before the pandemic viable, in spite of more competition from overseas-based online travel agents (OTAs).

''People are losing their livelihoods - I've heard lots of people who are remortgaging their homes, they're working other jobs but still servicing their customers because they feel an obligation.''

The international education sector got a $51m funding boost this week and Coombes said he was relaxed about the mechanism for helping agents out.

He also points out that outbound travel by Kiwis also helped inbound tourism, last year the country's biggest export earner.

Flight Centre NZ managing director David Coombes says there's no playbook for the crisis. Photo / Greg Bowker

''The other element of this that isn't acknowledged is that when the time comes and we're getting international tourists back again we're the part of the ecosystem that allows airlines to put capacity in because they won't fly here if it's unbalanced.''

The Travel Industry Suppliers Group has in a submission to the Government asked for additional support using unspent funds set aside for the Strategic Tourism Asset Protection Programme to keep the lights on and the bills paid.

Right now agents were mainly surviving with private borrowing and government help through programmes such as the wage subsidy, loss carry-back, and the small business cashflow scheme.

Its chairwoman, Robyn Galloway, estimates help required would amount to $100,000 for a mid-size business which previously had a turnover of $4m to $20m.

She said those who hadn't used agents were having the most problems.

''The large cost to government of repatriation for stranded Kiwis, is mainly caused by Kiwis who booked DIY holidays directly in overseas countries. Online international travel companies with zero presence in New Zealand have often failed to respond to their
Kiwi clients' requests for refunds,'' the submission to the Government says.

Galloway estimates about 88 per cent of agents are female.

The founder of Viva Expeditions Rachel Williams said her firm had the expertise to arrange the repatriation of New Zealanders from Peru to this country via Chile in April.

The payment for the work was effectively the only income her firm had received in five months and it had cut staff from 14 to eight and without any more help more cuts could follow.

''There is still no light at the end of the tunnel as to when this will stop.''

Coombes said the sector would survive Covid-19.

''We will be here in some shape as an industry. We just don't know what we're going to look like, that's why we are seeking some assistance to get us to that moment,'' he said.