A study has indicated that innovative ‘pay when you fly’ options could boost bookings during the pandemic, when consumer confidence is at a low. Jenny Southan reports
According to a survey from travel technology company Amadeus of 5,000 travellers from France, Germany, Malaysia, the UK and the US in May 21, 81 per cent of people said heightened risk of cancellation was a barrier to booking travel this year with “refund uncertainty” the top concern.
Meanwhile, 62 per cent of travellers said they would be likely to take-up new “pay when you fly” (PWYF) options to reduce the likelihood of having to apply for a refund, if they were available.
Periods of high cancellation during the Covid crisis 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 Amadeus says that “limited clarity on the lifting of government restrictions has resulted in uncertainty for those travellers seeking to redeem them”.
In terms of the biggest concerns for travellers when a flight is cancelled, refund uncertainty is top for 46 per cent of people, while the refund process is the biggest headache for 38 per cent of people.
Bart Tompkins, managing director payments for Amadeus, says: “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 travelers 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” (BNPL) schemes that require people 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 travellers more likely to add additional services like meals and bags, if PWYF is offered by the airline.
Amadeus says PWYF “refers to a novel payment option that sees the traveller pay a small deposit, in the region of 10-20 per cent of the total cost (which is non-refundable in the event the traveler decides to cancel). The balance is then settled a few weeks prior to departure, minimising the risk of cancelation”.
However, Globetrender disapproves of this definition because how does “settling the balance a few weeks prior to departure” equate to “paying when you fly”? We would call for payments to be taken only when the plane takes off.