What’s next for STA Travel customers left thousands of rands out of pocket?

In the spirit of making 2020 her year, Nthabiseng Salemane decided she would travel. So she saved up in 2019, booked her trip with STA Travel in September 2019 and committed to paying off the balance by February 2020.

However, thanks to the travel restrictions brought on by the Covid-19 pandemic and the lockdown put in place to manage the spread of the virus, she never got to take her trip.

All the while, Salemane said she had kept in touch with her STA Travel agent, Bianca, who repeatedly reassured her that she would still be able to travel once restrictions eased up.

Towards the end of March, upon the government’s announcement that the country would go into a lockdown and ban international travel, Salemane decided to initiate the process of getting her money back. She was told she would lose her R1000 deposit if she did so, and she indicated that she did not have a problem with this.

“I’d much rather lose a thousand Rand than fifteen thousand Rand which I can save and then take out later once everything is back to normal, whenever that may be,” said Salemane in a chat with the Citizen.

According to Salemane, Bianca then tried to coerce to rather convert the funds into STA Travel credit instead of taking a cash refund and added that the travel credit came with all sorts of wonderful incentives. She declined and insisted on getting her money back and was then told that it would take at least 120 days before she would see a cent.

“I found that within this entire process I had to be the one to follow up with them, they never once came to me to say ‘Hi Nthabiseng, these are the options available.’ That never once happened and I was very frustrated because as an organisation, you need to inform your consumers of what’s happening.”

Things became dodgier in May when Salemane could no longer reach her travel agent who, until that point, had been easily contactable and very helpful. She then began communicating with Bianca’s manager Chevon, who told her that STA’s refund policy had changed since their last chat and that a cash refund would no longer be possible.

Chevon offered Ntahbiseng STA Travel credit which would be loaded to her profile and would be valid for two years for her to use when booking a trip through the agency in future.

“You can only enter into a cash refund after 12 months of the issue date of the travel credit… I was a little bit mad because Bianca never told me this and I only found this out after following up with them.”

Salemane was further blindsided by the news that STA Travel would cease to exist before they concluded the matter of refunding her the R16,000 she had paid them for her trip. News she found out about on Twitter on Monday when the news of the company’s closure broke and everyone took to their feeds to react.

The announcement came on Monday amid an ongoing five-month ban on international leisurely travel as part of national regulations aimed at curbing the spread of Covid-19.

Many attributed the company’s closure to the global pandemic and heavy decline in international travel from all countries, however, STA Travel and its Swiss holding company Diethelm Keller Holding (DKH) seem to have been in trouble for months.

RELATED: How the coronavirus pandemic ravaged medical tourism

The decision to close STA Travel offices worldwide came after the announcement that DKH was to be placed under administration.

It was first decided that “day to day operations may continue” at subsidiaries including the UK business but that decision later changed.

Travel Weekly UK reports that STA Travel Holding AG shared their own decision to file for insolvencey just days after it was announced that DKH was to be placed under administration.

“The global magnitude of the pandemic crisis has brought the travel industry to a standstill, including STA Travel, a student and youth travel company.

“Over recent months, the company took decisive measures to secure the business beyond Covid-19. However, sales have not picked up as anticipated, due to consumer uncertainties, further restrictions and renewed lock-down measures, which are expected to largely continue into 2021. As a consequence, STA Travel Holding AG, is filing for insolvency.”

Picture: iStock

Information about what this means for STA Travel employees and customers all over the world remains scant as the company has yet to issue any more public communication.

“I don’t even have the travel voucher, it’s just credit that was sitting on their profile,” lamented Salemane.

Heather Coyle-Dowling had a similar experience and both she and her husband are currently at their wits end about what to do in order to get their money back from STA Travel.

Much like Salemane, Coyle-Dowling initially had a very pleasant experience with her travel agent and the company when booking an Easter trip for her family.

However, upon trying to receive some sort of refund for the trip they could not take due to lockdown, both her agent and the company became cagey and unreachable.

“Then the fun and games started because obviously a lot of people wanted refunds because they [STA Travel] had got refunds from the airlines and the hotel, and I know this for a fact because I was working with my consultant quite a bit.”

“They wouldn’t physically refund and it was in the form of what they called a travel credit. Initially, it was valid for one and a half years and they upped it to two years and I mean, I tried on numerous occasions… and I said to the lady ‘you know I have such a fear that you people are closing down and I don’t feel secure with my money lying at a third party’…”

YOU MIGHT ALSO LIKE: Not the end of the road for travel agencies, says Asata CEO

Like Bianca (the travel agent) did with Salemane, Coyle-Dowling’s agent assured her that her money was safe and that they would not be closing down.

“I think she rattled off that they were members of some or other something which was our protection. But, I have since gone back on that email and the link that she provided me. Before, it used to take you to the website and you would go on to their terms and conditions but I see it doesn’t do that anymore because obviously the website is frozen.”

Coyle-Dowling says that her agent’s reassurances put her mind at ease but they did nothing to calm her husband’s anxieties and he insisted that they find a way to get their money back in cash.

Her family trip was actually part of a group booking which she opted in to at a later stage than everyone else and she estimates that they have collectively lost over R200,000 to STA Travel under the current circumstances.

“So we never got our refund, we got a travel credit and we hadn’t booked our new dates yet because we were just waiting to see. We were hoping to go in Easter next year. We were just waiting to see with Corona and yeah, next thing I see, I was on Facebook and they had popped up that they had closed. That was really a big shock the way that was handled.”

Over and above the travel insurance offered by STA, Coyle-Dowling took out her own additional travel insurance. However, she was told that the company she took the insurance out with that they do not cover instances of insolvency.

Young couple on vacation in Dubai Marina. Image for illustrative purposes only | Image: iStock

Asanda Mkhize and her boyfriend Sandile booked their trip last November and have thus far paid STA R38,000.

Unlike most other clients, the pair opted not to cancel their trip but rather postpone it until government allowed cross-border travel. STA Travel accepted this decision and promised to keep them informed of any developments.

As the months went by, it became increasingly difficult to reach their travel agent, whom she says was working out of the Cresta branch.

She had to resort to calling other branches in order to get some sort of answer from the company and was told that all the company’s agents were not available at all as they had no access to the company’s systems, due to the fact that they had to work remotely under lockdown.

“I was passed around from branch to branch, spoke to different agents and different managers. There was a point where even the agents were not available and the manager told me that it was just them basically.”

“I asked them if they were going through some kind of downsizing or anything like that because at the time, Flight Centre was downsizing because every time I called the one [office] I started the process with they were not available.”

Asanda says the manager she spoke to reassured her that, that was not the case and that it was simply due to the fact that everyone had to work from home.

The couple was supposed to depart for their trip on 5 August.

“As the date was approaching, I kept asking them ‘okay, what are we going to do?’ And they said they would give me a credit voucher. They then promised that they would update me once the airline updated them.”

Due to how uneasy she felt about the minimal communication she had had with STA Travel thus far, Asanda contacted the airline, Cathay Pacific directly. They initially informed her that she would have to wait to hear from the travel agency before later confirming that the flights that had been booked under her and her partner’s names were now cancelled.

She then tried to call STA Travel after hearing from the airline in four different emails.

“I tried to call them for days without reaching anyone, leaving messages etc, with no one calling me back. Eventually, I got through to another manager. He was actually shocked, he didn’t even know that I knew that my flights were cancelled.”

Asanda noted her frustration with having to be the one going off in pursuit of more information on her own accord and struggling to reach the agency.

She too was eventually given an STA Travel credit voucher and reminded that she could not use this to pay directly for flights and accommodation as it was only on STA’s books.

She once again asked STA Travel what would happen on the off chance that they closed up shop and says they assured her there would be a refund process but would not explain any further.

Asanda has not heard from STA Travel since.

The money owed to two Absa bank clients the money is urgently needed to fulfil important financial commitments. Image: iStock

So what now?

Though STA Travel is not a member of the Association of Southern African Travel Agents, the organisation confirmed “the industry as a whole has made every effort to assist customers to reschedule their travels with little to no compensation since the travel ban was implemented in March, as international outbound travel remains closed.”

Asata had nothing further to say on the matter of STA’s collapse and the lurch its customers now find themselves in.

However, according to Joseph Selolo, Director of Prosecutions at the National Consumer Commission “consumers will have to communicate with the liquidators appointed by the court and submit their claims” because the company is in liquidation.

They will then be required to submit proof of their claims and hope for the best.

Like Selolo, Ouma Ramaru of the Consumer Goods and Services Ombudsman (CGSO) suggests that consumers contact the liquidators to find what process they need to follow in order to lodge a claim on the estate.

“I am sure the liquidators’ contacts are available to the public. Alternatively, consumers can seek legal assistance.”

Ramaru added that there were actually a few complaints lodged at the CGSO against STA Travel during the lockdown and that the business did refund the consumers in question.

“We are just not sure [if] the complaints that we still have open on our side against them if they will attend to them following the business closing down.”

Other customers have opted to looking into whether or not they are covered by travel insurance, which is most likely not the case, while some customers are hoping credit card refund is possible under South Africa’s consumer protection laws, as they paid for goods and services that they never received.

“Customers who opt to use their credit card for transactions have the added peace-of-mind of qualifying for chargeback rights, should merchants not deliver goods and services, as promised, that have been paid for by the customer,” explained Cowyk Fox, Managing Executive: Everyday Banking, Absa Retail and Business Bank.

“In essence, a chargeback prevents customers from suffering financial loss and engaging in lengthy disputes with merchants – the bank takes care of this within a clearly defined process. Generally speaking, where a merchant has not delivered a service or product paid for by a card, there would be a chargeback right (which can be processed to the merchant’s acquiring bank).”

Fox adds that chargebacks are typically applicable from the point at which the service was to be delivered, which, in this particular case, would be the point of liquidation.

“Absa has taken note of the unfortunate situation surrounding STA Travel and empathize with customers who have now been inconvenienced. Absa customers who have booked via STA Travel, are encouraged to approach us (or email: disputes@absa.co.za) to assist with the chargeback process. As with all chargeback requests, each matter is evaluated in line with the VISA and MasterCard chargeback rules,” concluded Fox.

For more news your way, download The Citizen’s app for iOS and Android.