Travel agents take hit but see brighter future
Travel agents are losing hundreds of staff with all businesses having made none or very few sales during the past month, but are planning for a recovery.
Business for the 5000-strong agent workforce was down by more than 100 per cent year on year when refunds are accounted for, says the Travel Agents Association of NZ (Taanz).
“We expect this is the new business usual as countries grapple with containment and it could be three months or more away from seeing signs of a global travel recovery,” said association chief executive Andrew Olsen.
Other agents have told of the efforts their staff made to get clients home in the growing health emergency as their own businesses were collapsing around them.
Staff were working around the clock with the prospect of losing their own jobs.
Olsen has asked for patience from customers and refunds and credit notes on non-refundable tickets have been one of the priorities of agents who were now the meat in the sandwich between airlines and passengers.
“The main reason for refunds being held up is in fact some airlines are struggling to meet the deadlines they should be meeting under their airline ticketing scheme rules.”
Most airlines have adopted a credit policy for non-refundable fares which in some cases means tickets can be redeemed for up to 24 months.
“The agent is the meat in the sandwich and is not holding on to the funds. The funds are with the airline.”
The travel industry would struggle if the Covid-19 wage subsidy remained in its current state where those receiving $585 a week for full-time staff must try to pay the employee named on the application 80 per cent of their usual wages, Olsen said.
There have been hundreds of reported and unreported redundancies, he said.
“Everyone faces an uncertain future and we must be a specifically targeted sector in the next round of subsidy. Businesses won’t be able to hold on if the next round requires an 80 per cent employer contribution.”
Olsen said the association would be in touch with the Government on the issue.
Travel agents would be integral in restarting international inbound tourism.
“The tourism industry needs a resilient outbound travel agent sector because travel agents write the majority of business out of NZ. If the planes aren’t filled on the way out, airlines will take a second look at flying here.”
That would not be good for an economic rebound helped by international visitor spending which was more than $17 billion last year.
Olsen said the industry would look different on the other side of this and it would take time to ramp up volume as it was uncertain which trade and travel corridors would open. “One thing for certain is that travel agents will get through this but they will need government help.”
Olsen said some of the post-covid-19 stimulus would come from the many customers who hold airline credits.
“They will be contacting agents when things start again and only a travel agent will be able to give the expert advice on reusing that credit in conjunction with the attractions and services in the destination,” he said.
The other stimulus will come from those Covid-weary Kiwis who just need a break — “and we expect most will”.
Working to clients home get
Keith and Lisa Sumner took over Gilpin Travel in 1999 and own it with two private partners but they now face a grim outlook.
The corporate specialists won a top Taanz award last year and Keith Sumner is confident the business can bounce back but it will look much different.
“Effectively our income stopped about three weeks ago — business started to drop off a cliff,” he said.
“We and alot of other travel agents are in negative space at the moment — zero because of refunds — it really an extreme example,” Sumner said as his 40-strong staff had left the Auckland firm’s Grey Lynn headquarters last week.
In the scramble to get home before border closures and the lockdown last week, his staff were dealing with clients overseas and around New Zealand.
“It was about compassion at that stage,” said Sumner.
And it showed the value of expertise at a time when airline phone lines were jammed.
“We were able to help those in an airline (phone) help queue and we’ve been able to find a seat for them because we have access to the system. It’s been so extreme they handed their cellphones to people who weren’t our customers and asked us to help them.”
He said online travel agents (OTAS) were predicted to kill off traditional agents years ago but both had prospered during the travel boom of the past decade.
OTAS are overseas based and employ just a handful of staff in this country compared to the thousands of taxpaying workers that were employed by bricks and mortar agents. The OTAS have been
"We may rebound ahead of other countries — we need to maximise opportunities to travel for New Zealanders."
overwhelmed by clients calling their helpdesks.
The Commerce Commission reminded travellers that overseas booking sites weren’t covered by the Fair Trading Act although government-ordered border closures would mean most businesses would be freed of the normal obligations under the law.
Sumner would not be drawn much on what he thought of OTAS saying only: “You really do have to question the ethics of those online companies — we’ve been working around the clock.”
The OTAS haven’t been immune though with Australia-based Webjet this week announcing 440 redundancies, with the majority of remaining staff moving to four-day working weeks.
One key plank of OTAS is no store fronts and this is something Sumner said he would likely replicate when the recovery came.
“We don’t think that bricks and mortar is going to be the answer — it will drive us more quickly down the virtual route that we should all been on anyway.”
He said good agents would now maintain relationships with their customers and continue to provide expert service and care.
“They’ll go underground and pop up again as soon as the recovery comes. They’re very resilient people — they’ve been through lots of these things in the past although nothing as extreme as this obviously.”
He praised the Government for working so quickly on the wage subsidy scheme. Although he was confident of bouncing back, his firm was badly financially hit for now.
“We had a company that was yesterday worth millions but now its worth cents. But that’s not what it’s all about — we had a business with 40 people who want emotional help and financial help but as travel companies we’re not in a position to be able to offer that.”
He said there would be more video conferencing among corporates and it would take a long time for confidence to return to business travel.
“It’s one thing for our country to be safe or Australia to be safe but where else are you going to fly around the world and feel safe?”
Changing direction
Flight Centre New Zealand has made 250 workers redundant and will temporarily close 33 branches. It has about 1200 employees here and across its global business Flight Centre is cutting or putting on leave a third of its 20,000 staff.
Chief financial officer in this country, Victoria (Tori) Courtney, said the company had to take steps it didn’t want to but needed to to shore up its ability to grow out of the crisis.
In the lead-up to border closures and lockdown, consultants were working around the clock to get international travellers and domestic passengers back to their homes while also having to cope with constantly changing restrictions around the world.
“There was a huge spike in the volume of work that we had to do — it just didn’t generate much revenue,” she said.
In the long term, the experience could enhance the role of travel agent.
“For the last three weeks, we’ve been supporting customers as much as we can, particularly with information where customers who have bought online and haven’t been able to get answers.”
Agents were able to get clients waitlisted on airlines.
It was the complexity which reinforced the value of an agent.
She said her firm could pivot to book more domestic travel. It has primarily booked overseas leisure travel previously.
Getting Kiwis to skifields would be one way of coming out of the travel slump.
“We may rebound ahead of other countries — we need to maximise opportunities to travel for New Zealanders,” said Courtney.
“We love to travel and we love a bargain.”