Periods of high cancellation during the pandemic have led to problems refunding travellers, with some refunds taking many months to process. To preserve vital cashflow, travel companies have offered vouchers for future travel, but limited clarity on the lifting of government restrictions has resulted in uncertainty for those travellers seeking to redeem them.
A new study by Amadeus, conducted in May 2021 with 5,000 travellers across the world, highlights the impact that refund uncertainty is having on traveller confidence and bookings during 2021, as the industry begins its recovery.
Eighty-one per cent of travellers confirmed that the increased risk of cancellations due to the pandemic is a barrier to booking travel this year, with refund uncertainty (46 per cent) and the inconvenience of the refund process (38 per cent) topping concerns when a flight is cancelled.
Several airlines are taking proactive steps to overcome refund uncertainty through innovative new payment options. A major European carrier has taken the lead with a Pay When You Fly (PWYF) option, allowing travellers to make a flight reservation – which also includes a hotel or car hire – by paying a small deposit in the region of 15 per cent and then settling the balance a few weeks before travel.
Nicolas Ortiz, head of payment product incubation, Amadeus Payments, said: “We’re entering a critical phase for travel’s recovery, and our industry needs to build confidence at every opportunity. We believe PWYF will drive traveller confidence, encouraging travel planning and booking even in an uncertain environment with changing government restrictions.
“The new approach may also result in higher value bookings because travellers only need to make the balance of the payment when it’s clear the flight will depart as planned.”
According to the Amadeus study, PWYF is the most appealing payment option (39 per cent) compared to traditional pay at booking (36 per cent) and Buy Now Pay Later schemes that require the traveller to enter a credit agreement for the entire balance (24 per cent).
As well as building confidence by overcoming refund uncertainty, PWYF could boost industry revenues with travellers willing to spend 36 per cent more per trip on average, and 49 per cent of travelers more likely to add additional services like meals and bags, if PWYF is offered by the airline.