Managing the financial risks of international travel

With many of us getting burnt by holiday cancellations at the beginning of the pandemic, the travel industry quite rightfully wants to be upfront about travel risks. It’s commendable, because an international holiday is serious money.

There’s plenty of optimism about Kiwis making new international bookings, but I wonder how many look at the warnings and think: “Blimey, why on earth would I travel?”

We are being told to buy expensive fully flexible tickets and warned that costs incurred by a border closure or local lockdown overseas won’t be covered by our insurer.

What’s lacking is a little perspective and balance. The international industry understands what is required to regain the confidence of travellers. Respecting our wallet and finding solutions to our risks is a big part of it. Positive change has already occurred.

Let’s step back and look at the changes:

Airlines

Fully flexible, fully refundable flights cost an arm and a leg and I don’t believe they’re necessary. Nearly every ticket now has a level of flexibility in it. And almost every negative event that prevents travel (including Covid-19) is insurable.

For non-insurable issues such as a border closure, airlines are acutely aware of your position. In order to regain confidence in tourism, they work with customers to rearrange flights, give credits, or refunds when they don’t fly. Your flight money doesn’t go up in smoke just because an insurer won’t cover the event. Find out if the airline charges for changes and credit use-by dates.

Hotels and excursions

Online booking giants such as Booking.com and Airbnb have clear cancellation periods and filters to sift for the most flexible deals. Online technology now plays a big part in making travel changes easy.

NZ borders closing

I’ll go out on a limb here. I don’t believe any New Zealand Government will block our citizens again. While MIQ could never be discounted as a tool, refusing to upscale was lambasted internationally and faces legal action locally.

Foreign borders closing

This is a scenario insurers don’t cover. While it might feel like a plausible risk to us, other governments have shut borders sparingly in the past 12 months.

Instances have been short and country-specific. For example, the French blocked the British at the start of the winter ski season in December 2021, but reopened again a few weeks later when Omicron spread. It wasn’t without warning and many Brits chose to travel early to get into France and hit the snow. Any travellers already in Europe had no issues.

If you get caught mid-holiday, it’s still not a disaster. I’ve personally travelled at a time when Portugal blocked UK direct flights due to the Kent variant and the UK returned the favour due to a Brazilian variant.

Despite all this, flights via Paris were still possible and that was the altered route. With vast populations of people working across borders and families spread, most situations are solvable and have exemptions that are sorted at the airport.

With perspective, other nations don’t operate like New Zealand and there is always a solution – or warning time – given.

Local lockdowns

This is another insurance exclusion. You arrive in a country and they might impose a local lockdown. Even when these are regional with checkpoints, I’ve found tourists were given exemptions.

Rental car companies still operate and you can move on to your next hotel or friend you’re visiting. You’ll have to follow their rules, but it’s unlikely to cause large additional costs. In the current climate, lockdowns are no longer a method of choice and these risks have shrunk considerably.

Travel insurance

Take out a New Zealand-based policy as soon as you book your holiday. If you book three months in advance, there’s plenty of time to break a leg, have a heart attack or catch Covid-19 just before getting on the plane. Insurance covers that important period between booking and take-off.

With the vast majority of tourist destinations on the SafeTravel website listed as “level 2, exercise increased caution”, insurance is now available. Take the time to read each insurer's Covid-19 clauses as I’ve seen some miserable levels of cover (budget-level hotel allowances for those who need to recover from infection).

Entry rules for vaccination, booster and testing in each country

Your airline can’t board you without checking you’ve met the rules. They will send emails reminding you to upload proof of vaccination, locator form and Covid-19 test results if required.

Getting pre-verified gives peace of mind. Border experiences are now much smoother with the odd spot check, given airlines do so much of the work. Locator forms are also becoming a relic, with Greece dropping the forms on March 15 and the British due to delete them at Easter.

Some countries never had them in the first place.

Covid-19 testing and local health passes

Pre-flight and arrival testing is also becoming a thing of the past, but do check as we’re in a period of flux. One tip, the “RAT” in New Zealand is often known as an LFT (lateral flow test) in other countries.

Major airports have fast testing centres and booking details on their websites. It’s possible the only test you’ll need is the one to come home.

The use of Covid passes to enter indoor venues and restaurants is also being eliminated in various countries. The French stopped the Pass Sanitaire on March 14. The English have no rules whatsoever, with masks optional and isolating when infected left to common sense.

Janine Starks is the author of www.moneytips.nz and can be contacted at moneytips.nz@gmail.com. She is a financial commentator with expertise in banking, personal finance and funds management.