Periods of high cancellation during the pandemic have led to problems refunding travelers, 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 travelers seeking to redeem them.
Now, a new study with 5,000 travelers across the world highlights the impact that ‘refund uncertainty’ is having on traveler confidence and bookings during 2021, as the industry begins its recovery. 81% of travelers confirmed that the increased risk of cancellations due to the pandemic is a barrier to booking travel this year, with refund uncertainty (46%) and the inconvenience of the refund process (38%) 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 travelers to make a flight reservation (which also includes a hotel or car hire) by paying a small deposit in the region of 15% and then settling the balance a few weeks before travel.
According to the Amadeus study, PWYF is the most appealing payment option (39%) compared to traditional pay at booking (36%) and ‘Buy Now Pay Later’ (BNPL) schemes that require the traveler to enter a credit agreement for the entire balance (24%).
As well as building confidence by overcoming refund uncertainty, PWYF could boost industry revenues with travelers willing to spend 36% more per trip on average, and 49% of travelers more likely to add additional services like meals and bags, if PWYF is offered by the airline.