81% of travelers say heightened risk of cancellation is a barrier to booking travel this year with ‘refund uncertainty’ the top concern. 62% of travelers likely to take-up new ‘Pay when you fly’ options to reduce exposure to the refund process.
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.
Bart Tompkins, Managing Director, Payments, Amadeus commented: “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 traveler 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%) 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.
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
