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STA Travel collapses into liquidation following creditors meeting

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Home » News » STA Travel customers and creditors get the lowdown from administrators

STA Travel customers and creditors get the lowdown from administrators

Customers and creditors of the collapsed STA Travel have been filled in on the company’s dire financial state by its local administrators.

Jason Tracy and Tim Norman of Deloitte Australia were appointed voluntary administrators of STA Travel Group (made up of STA Travel Pty Ltd, STA Travel Academic Pty Ltd and IEP Pty Ltd) on Friday after its parent company filed for insolvency last week.

An update on STA Travel’s Aussie website said the administrators have commenced an “urgent” assessment of the financial position of the companies to determine the viability of a recapitalisation, sale and/or asset realisation strategy.

“We will continue to work with STA Travel Group management and its overseas administrators to seek the best outcome for customers and creditors,” it said.

“STA Travel Group operates as a global group, and its operations are complex. Customer deposits, for example, are in many cases not held in Australia, and third-party companies overseas are also involved.

“This is a challenging situation, and the administrators are investigating possible options (if any) available to customers to allow them to recover any pre-paid bookings or continue their travel plans.”

The update noted that access to STA Travel personnel was not possible for customers, given all Australian STA Travel stores and its call centre were closed prior to the appointment of administrators and its website is down (although it still appears to be working for Travel Weekly ).

“In the interim, customers holding bookings should contact their airline, hotel or tour operator regarding the status of their bookings,” it said.

“You can also consider contacting your credit card provider if travel bookings were paid by credit card.”

A freeze has been placed on the payment of amounts due to creditors of STA Travel Group for debts incurred up to the date of the appointment of the administrators while they explore the available options.

The administrators will hold an initial meeting of creditors within the first eight business days from their appointment. The purpose of this meeting will be to provide information to the creditors on the process and confirm if creditors wish to form a committee.

The administrators then have to investigate the affairs of the companies and report back to creditors and employees on their findings. They will also make a recommendation to creditors regarding the future of each of the companies.

The second meeting of creditors is expected to be held within 25 days of the administrators’ appointment, but may be extended by the court if the administrators think an extension is in the best interest of creditors.

Email the Travel Weekly team at [email protected]

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STA Travel goes into administration with travellers still trying to get refunds

Topic: Travel and Tourism (Lifestyle and Leisure)

Australians are being urged to go on domestic holidays to prop up the tourism and travel industries. ( ABC News: Ian Cutmore )

Thousands of travellers who booked holidays before the coronavirus pandemic are now in limbo after student travel agency STA went into administration.

Key points:

• All 27 STA outlets are "closed for the foreseeable future"
• Customers are being advised to contact airlines, hotel companies and banks about refunds
• The business employs 180 full-time employees

Deloitte joint voluntary administrator Jason Tracy said they were undertaking an "urgent assessment" of the company's financial position and exploring whether a global restructure or business sale could be achieved.

"COVID-19 has brought the travel industry in Australia close to a standstill," Mr Tracy said.

All 27 STA Travel stores across Australia will be closed for the foreseeable future.

The company currently employs 180 full-time staff across the country.

"We appreciate this will be a stressful time for all involved, and in particular customers and employees," Mr Tracy said.

"We will be communicating with them as soon as possible as we assess and understand the situation, and options going forward."

Customers affected by the announcement are advised to contact their airlines and hotels regarding the status of their bookings, as well as their banks and credit card companies, but some are struggling to get their money back.

Brisbane-based Trinity Rafferty had booked a four-week holiday to Europe with her husband in September 2019, before the COVID-19 pandemic began.

Ms Rafferty said she was "absolutely gutted".

Trinity Rafferty is trying to get more than $10,000 refunded. ( Supplied: Trinity Rafferty )

"We're not made of money. We did everything, we saved like mad," she said.

"We paid cash for everything. We didn't put anything on credit because we had the money there. Biggest mistake we could have ever made."

Ms Rafferty said she had been trying to get a refund of more than $10,000 after Australian Government travel restrictions were introduced in March, but was only offered a credit.

She said she was only offered a "blue voucher" valid for 12 months after her original holiday plans, despite paying full price for a refundable ticket.

Trinity Rafferty says she was promised a full refund when she bought the tickets. ( Supplied: Trinity Rafferty )

"How dare this company say, we signed up with terms and conditions saying that if anything happened, if we cancelled within a certain amount of time, that we would actually get a full refund," Mrs Rafferty said.

"But now they've done this and now they're saying that, 'no, we're not going to give you a refund', and they're holding our money ransom."

'It's a lot of money just to say bye to'

Vanessa Churches has a similar story. She had booked a holiday to the US with her husband and in-laws.

Ms Churches said she was trying to recoup $22,000 from STA Travel and was also offered store credit.

"It's a lot of money just to say bye to," Mrs Churches said.

Vanessa Churches (second from left) was set to go to the US with her husband and in-laws. ( Supplied: Vanessa Churches )

She said her in-laws were depending on the refunded money to fund their retirement and that she had postponed IVF plans because of the uncertainty.

Ms Churches said she had lost contact with her store representative in the past 24 hours.

"I think [we were] all a bit stressed out yesterday when we heard about it and not being able to contact anyone," she said.

The ABC has reached out to STA Travel for comment.

Mr Tracy said the announcement was a result of reduced demand for travel because of COVID-19 travel restrictions.

"The collapse of STA Travel in Australia and New Zealand is certainly related to trading conditions caused by the pandemic, and has been preceded by its Swiss holding company recently filing for insolvency," Mr Tracey said.

The travel industry has been hit hard by COVID-19, with Virgin Australia entering administration earlier this year and Qantas this week announcing a $2 billion loss .

With international borders closed, Tourism Minister Simon Birmingham urged Australians to go on domestic holidays to try to pump some money back into the ailing industry, but Qantas chief executive Alan Joyce criticised border closures between states that are making that difficult.

"We don't have clear guidelines for when the borders will open, when they will close," he said.

"So we have this situation where there are large numbers of states and territories that have zero cases and they're not even open to each other."

"It feels like there are no reality-based decisions, it's just maybe the politics, and we think that will cost jobs and [cause] businesses, particularly a lot of the small businesses in Queensland, to go out of business," he added.

"We need to get people back in jobs, otherwise we're going to have a cliff that's going to be bigger than the financial impact that COVID-19 has already caused."

CAPE TOWN FOR CAPETONIANS

Employees and customers left in the lurch by Swiss-owned STA Travel

Employees of STA Travel in South Africa have been left in limbo since 21 August, when the company ceased trading, one of the Covid-19 pandemic’s many business casualties. The company says staff contracts are still valid, which means employees can’t apply for UIF. Yet staff have been paid only a fraction of their August salaries and no September salary.

There has been no communication from the company since 10 September. A STA employee told GroundUp, “Termination letter requests continue to be ignored.”

The international travel company had been operating throughout the lockdown. Staff were working from home at reduced salaries, and the group had managed to reduce costs by negotiating rent holidays on the 21 branches across South Africa, according to a STA manager who wished to remain anonymous.

STA continued to sell packages during lockdown and people were encouraged to book their 2021 trips. Customers whose travel plans were cancelled due to the lockdown, received ‘travel credits’ instead of cash refunds. They were told that these would be refundable when lockdown eased.

Then on 19 August, the holding company, STA Travel Holding AG, revealed to its worldwide staff it would be filing for insolvency. In a statement, Casper Urhammer, the Switzerland-based CEO of both STA Travel and of its holding company, Diethelm Keller Travel Group (which is itself 85% owned by Swiss firm Diethelm Keller Holdings) announced that he would be resigning from leading the STA Travel group, and handing over operations to outside administrators.

On 20 August, it was  reported  that STA Travel Holding AG had filed for insolvency.

As in South Africa, STA Travel in the UK, Australia, and New Zealand, signalled that they would be entering liquidation the next day, on 21 August. In Australia, and in New Zealand, Deloitte was appointed to administer the liquidation.

No public announcement was made about the status of the South African company.

On 24 August, STA Travel South Africa posted an announcement on its Facebook page: “To our valued customers, due to the recent announcement that STA Travel South Africa has ceased trading, unfortunately our travel experts are unable to assist you at this time. Please be assured that if you had a previous booking with us, or hold a live booking, you will receive further communication in the coming days. We are sorry for the inconvenience and the limited information available to you at this time.”

On 25 August, Justin Kable, the country manager for STA Travel SA, sent an email to all STA Travel employees, which announced that – following the decision to cease trading – “We are trying our best to provide as much information as we can during these difficult times and will provide regular updates.”

On that day, employees were not paid, though this was not mentioned in the email.

The next and so far final update from Kable was on 10 September. Kable announced then that the STA South Africa board had decided to enter voluntary liquidation, and that the board had “recommended this view to the shareholder and requested that the shareholder adopt a special resolution to voluntarily wind up the company under the supervision of the creditors”.

According to the Swiss companies register, STA South Africa’s shareholder is STA Travel Holdings AG. With this shareholder being liquidated, how and who is responsible for issuing the special resolution is uncertain. GroundUp’s attempts to contact STA Travel Holdings AG have been met with silence.

STA employees

“Whilst we await action on the above view, presently all contracts of employment between the Company and employees continue as per their existing terms and conditions. You will be provided with further updates as to effect on the employment relationship as the process of winding up the company progresses,” Kable said in his 10 September email.

Since staff contracts are said to be still valid, staff claim they are unable to apply for UIF. Many are hoping they can get Covid relief funds.

A STA employee told GroundUp, “We’ve still received zero update on our August salary. Termination letter requests continue to be ignored.”

Some employees told GroundUp that there had been retrenchments during the lockdown period, and reduced salaries, but the liquidation announcement came as a shock, since staff had been selling travel packages believing that these would be honoured.

Frustrated customers have been harassing their travel agents to find out about the status of their trips and the money they paid. Some staff have shut off their social media accounts and personal phones because of the constant calls. They say they have just as little information as the customers.

According to the Insolvency Act, when employees’ contracts are suspended due to liquidation proceedings, they are entitled to unemployment benefits. But no liquidators have been announced.

Attempts to find out whether a liquidator has been appointed in South Africa have so far been unsuccessful. The computer system for the Masters of the High Court in Johannesburg, where STA Travel holds its registered headquarters, has been down for more than a week, according to a staff member. Calls to the national office of the Masters of the High Court have been unanswered. Deloitte has said it is not involved.

GroundUp has contacted STA Travel’s South African auditors, PWC, and is awaiting a reply.

Meanwhile hundreds of customers have been left stranded. STA Travel SA’s Facebook page is filled with customers who have no idea what is happening to their deposits. Some claim STA Travel has received refunds from airline companies, and has not passed these on to consumers.

On the company’s website, all pages have been replaced by a statement: “Please be advised that the board of directors of STA Travel (Pty) Ltd has resolved not to begin business rescue proceedings (as contemplated in the Companies Act, 2008),” and a link to a pdf which contains a copy of the Form CoR123.3 (Notice of Decision Not To Begin Business Rescue), and a fuller statement from the board of STA Travel. This communication is signed by Reinhard Kotzaurek.

On the website of the Companies and Intellectual Property Commission, STA Travel South Africa is now listed as being in voluntary liquidation.

Attempts to contact the directors with the details available on STA Travel South Africa website have been unsuccessful.

Diethelm Keller Holdings replied to us: “STA Travel Holding AG was an independent legal entity. You may want to contact the local authorities to find out more about the assigned official administrator in respective countries – we may not provide any contact details. FYI, Diethelm Keller is not insolvent.”

According to the Diethelm Keller Group’s  2019 Annual Report , their business unit, Diethelm Keller Travel (85% owned by DKG), of which STA Travel was the jewel in the crown, achieved sales of approximately R23.4 billion in 2019.

Source: GroundUp

Picture: James Stent

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$14 million penalty for STA Travel – ACCC spotlights cancellation and refund claims amidst COVID-19 travel disruptions

By Mark Armstrong, Solicitor

  At a time where travel companies and travellers are facing serious challenges with global travel restrictions forcing urgent changes to travel plans, and heightened sensitivities around cancellation costs, the ACCC has had a timely victory in this area. One of Australia’s most well-known travel agencies, STA Travel Pty Ltd has been found in breach of the Australian Consumer Law (ACL) for using misleading advertising in relation to a product that claimed to allow customers to change flights without paying any additional fees.  The Australian Competition and Consumer Commission (ACCC) was successful in its case, with the Federal Court ordering that STA pay $14 million in penalties for the false or misleading claims.  STA Travel’s advertising strategy was problematic from a misleading or deceptive conduct perspective, as well as a pricing perspective, as many customers still paid cancellation charges. This case reinforces that price transparency is still key to avoiding severe penalties.

What happened?

STA Travel tout themselves as ‘the world’s largest student and youth travel company’ and are widely regarded as having cheap flights due to the exclusive range of student and under-31 fares offered.  When purchasing airfares from STA, customers are given the option to buy a MultiFLEX Pass: if the traveller decides to change their flight, they will have to pay the difference in the cost of the airfare and applicable taxes, but the Pass enables the traveller to make the change(s) without paying any additional fees or charges.  Depending on the type of Pass purchased, changes to flights can be made once (for the purchase of a $49 ‘OneFLEX’ Pass), three times (for the purchase of a $99 ‘3 Change’ or ‘MultiFLEX’ Pass) or an unlimited number of times (for the purchase of a $149 ‘UltimateFLEX’ Pass).

For travellers wishing to travel on a more flexible itinerary, this appeared to be an enticing offer and between 2015 and 2019, STA Travel estimates that it sold approximately 16,000 MultiFLEX Passes each year, although the ACCC alleged that STA’s MultiFLEX Passes have  been sold since at least September 2011 with over $12 million in revenue generated from MultiFLEX Pass sales alone.  Despite the claims of fee-free changes made in STA Travel’s advertising, the ACCC alleged that approximately 63% of customers who used their Pass to change flights were charged additional commissions or other fees, including airline change fees.  In almost 25% of cases, the additional charges paid by Pass holders were more than double the additional airfare and tax imposed by the airline, and in 12% of cases, Pass holders paid an additional charge, even though the airline had charged STA Travel nothing for the change.

The ACCC initiated proceedings in the Federal Court against STA Travel on 27 March 2019 on the basis that the representation that MultiFLEX Pass holders would not be charged any fees for date changes was false or misleading.  After STA Travel admitted liability and made joint submissions with the ACCC to the Federal Court, STA Travel was ordered to pay $14 million in penalties and contribute to the ACCC’s legal costs.

Misleading or Deceptive Conduct and the ACL

The ACCC’s case was based on the ACL, in Schedule 2 of the Competition and Consumer Law Act 2010 (Cth), which is the greatest source of rights and protections afforded to all consumers.  A key consumer protection is contained in section 18(1) of the ACL, which holds that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

The ACCC’s assertion that STA Travel engaged in misleading or deceptive conduct was bolstered by the wording of section 4 of the ACL, which holds that if a person makes a representation with respect to any future matter and the person does not have reasonable grounds for making the representation, the representation is taken to be misleading.  Logically, stating that consumers will not be charged additional fees if they purchase a particular product, only to then charge said customers additional fees, makes it clear that STA Travel did not have reasonable grounds to make such a representation and had therefore engaged in misleading or deceptive conduct.

In addition to the above, the ACCC also relied on ACL protections against false or misleading representations about goods or services, and misleading conduct as to the nature of services.  Section 29 of the ACL prohibits making a range of false or misleading representations, including under subsection (1)(g), that goods or services have uses or benefits.  Further, under section 34 of the ACL, a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.  The entire purpose of buying a MultiFLEX Pass was that travellers gain the benefit of not having to pay additional fees if they changed their flight.  On that basis, STA Travel’s claims that MultiFLEX Pass customers would not have to pay any further fees were held to be false.  One point to note is that as of the date of this publication, the three MultiFLEX Passes are still available for purchase from STA Travel, and are accompanied by wording such as, “With MultiFLEX we’ll waive all the date change fees, so you’ll just pay the difference in fare and taxes – if there are any” and “MultiFLEX allows you to change your flights without having to pay the change fees every time your plans change”. If STA intends to continue to charge additional fees after a customer has purchased a Pass, its current advertising may still well be problematic.

This sort of product may be lawful and offer legitimate benefits to the consumer, if it truly does offer greater flexibility and lower costs for cancellations. However, it will be fundamental to ensure that any advertising claims promoting the product are accurate and clearly disclose that potential cancellation charges may still apply.

ACCC warns of increased scrutiny on cancellations and refunds

Flight Centre has only very recently come under fire for enforcing its cancellation fees on individuals facing COVID-19 related travel disruptions.  Flight Centre’s announcement on Saturday of its decision to cease charging cancellation fees has been welcomed by the ACCC.  Flight Centre’s terms and conditions specified that customers would be charged $300 per person for cancelling an international flight or $50 for a domestic flight. However, following pressure from the ACCC, customers who paid Flight Centre’s cancellation charge from 13 March 2020 will now be refunded.  Additional fees charged by tour operators or airlines will still apply, however, several companies that form part of the Flight Centre group, including Aunt Betty and Student Universe will also stop charging cancellation fees.  The ACCC was prepared to challenge Flight Centre in court over this matter, but were pleased with Flight Centre’s decision as it would allow for a prompter resolution than that reached via litigation.  Importantly for all travel providers and consumers with cancelled travel plans, the ACCC chair, Rod Sims, noted that, “[the ACCC] are continuing to discuss issues in relation to refunds and cancellations with the travel sector and encourage that travel providers treat consumers fairly in these exceptional circumstances”.  In response to certain providers altering their refund policies and applying them to prior bookings, the ACCC has issued guidance warning against engaging in such conduct.  Given the uncertainty surrounding the future of international travel, the ACCC’s warning and increased scrutiny on this topic, businesses across this sector will need to remain vigilant.

A Note on Component Pricing

Separately to the issue of misleading and deceptive conduct there are specific laws on component pricing.  Section 48 of the ACL holds that customers must be presented with a single price for goods or services and if a single price is not appropriate, the supplier must present the price as a minimum total amount.  The “single price” is the minimum quantifiable consideration for the supply of the goods or services at the time of the representation. Another matter for consideration in making price claims is whether there are other components of the price that are quantifiable at the time of making the claim that should be properly included in that total price. Arguably, it would not be possible at the time of the claim here for STA to be able to properly quantify all potential permutations of a cancellation charge that may or may not arise. However, with certain specific claims relating to cancellation costs this may be a relevant consideration.  Ultimately, any possible fees or charges should be disclosed and not hidden.  This is particularly important in advertising material and suppliers need to ensure that their advertising is transparent and discloses any potential costs that will be borne by consumers.

What does this mean for you?

Given the heightened focus on cancellations for travel and many social, sporting and other activities, it is likely that cancellation charges and policies will continue under the spotlight.

Reviewing your current advertising practices to ensure they cannot be construed as being misleading or deceptive is prudent.  In doing so, it would also be wise to consider the manner in which you advertise prices and ensure that they are clear, accurate and not misleading.  Advertising must reflect the true nature of the product or service being advertised and the price listed should accurately reflect the product.  Given the substantial penalties businesses can face from non-compliance with the ACL, maintaining transparency in advertising and pricing is paramount.

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NOTICE OF MEETING OF MEMBERS OF COMMITTEE OF INSPECTION

Notice is given that a meeting of the committee of inspection of the Company, or a meeting of the committee of inspection for each of the Companies, (for multiple companies), will be held:

(If multiple companies, see special instructions for meeting times)

Agenda items are:

Discuss the Administrators' Report to Creditors issued on Thursday, 17 September 2020; Provide an update on the progress of the Administration to date, including status of recovery actions; Provide an update on the status of customer enquiries; Discuss the forthcoming Second Meeting of Creditors to be held on Friday, 25 September 2020; Consider and if thought fit, approve the Administrators' current remuneration from 21 August 2020 to 13 September 2020; Consider and if thought fit, approve the Administrators' future remuneration from 14 September 2020 to the completion of the Voluntary Administration; Consider any other business.

Members of the committee are advised proxies should be submitted to the convenor of the meeting by:

Members of the committee wishing to attend by electronic means are advised they can utilise the following facility:

Members of the Committee wishing to participate in the meeting by using electronic facilities must return to the convenor of the meeting not later than the second-last business day before the day of the meeting, a written statement setting out

Jason Tracy Administrator

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Sta Travel Pty. Ltd.

Description.

Sta Travel Pty Ltd is a limited by shares, Australian proprietary company. This corporation was registered on 1969-12-04 and was issued with the 004801512 ACN. Its Australian Business Number is 34004801512. Since 2020-12-15, the company is headquartered in NSW, post code 2000. The previous headquarters were located in VIC 3121 (from 2019-10-30 to 2020-12-15), VIC 3006 (from 2014-09-13 to 2019-10-30), and VIC 3006 (from 2010-12-21 to 2014-09-13). Sta Travel Pty Ltd was registered for the GST on 2000-07-01. The company has also used 10 business names, namely Student Travel Australia from 2004-05-14 to 2018-09-27, Campus Travel from 1999-11-01 to 2000-09-05 and Network Travel from 1999-11-01 to 2000-02-25. The above data comes from the ABN database which was updated on 2023-09-05. We found 5 trademarks that mention this company. Trademark number 743041 was filed on 1997-09-04 and is categorised as "word" (application status: "never registered, dead"). Other company trademarks include trademark number 747235 registered on 1997-10-28 in the "word" category (application status/date: "registered, live", 1997-10-28); and trademark number 814240 in the "word" category (application status/date: "never registered, dead", 1999-11-17).

Details for ABN 34004801512

Business names, main location, goods & services tax (gst).

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Company Trademarks

Trademark number: 743041, trademark number: 747235, trademark number: 814240, trademark number: 814241, trademark number: 823863, financial services authorised representative data, licence number: 000245631, licence number: 000386837, licence number: 000241713, licence number: 000239545, licence number: 000222444, find company, nsw 2000 location, selected companies in this postcode area.

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Contains public sector information licensed under the Creative Commons Attribution 3.0 Australia licence. Material on this website was obtained from publicly-accessible databases and is attributed to ©Commonwealth of Australia 2024 (http://data.gov.au, http://acnc.gov.au/ and http://abr.business.gov.au/), ©Intellectual Property Government Open Data 2024, ©ASIC - Company Register. While we try to make the information as precise and up-to-date as possible, we are aware the datasets are not always error-free. Aubiz.net will not take responsibility for any errors in the databases. The material provided should be treated as a starting point of more in-depth research, not as fact.

STA TRAVEL PTY. LTD. - NSW AUSTRALIA

Business information.

This company has been operating under the name STA TRAVEL PTY. LTD. since 21/08/2020 . Previous trading names included:

• HORIZON HOLIDAY TRAVEL CLUB PTY. LTD.
• STUDENT TRAVEL AUSTRALIA PTY. LTD.

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