Rethinking airline refunds, vouchers, and payments in a crisis

As airlines continue their battle for survival, there’s another challenge developing alongside: the acceleration of digital payments.

The transformation of many airlines and travel companies’ digital infrastructure was already underway before disaster struck down the world in March. But is right now the right time to be thinking of accelerating anything, except for getting the world’s businesses open again?

Yes, it is.

Nearly a decade ago, the Harvard Business Review wrote about companies’ ability to manage uncertainty and adaptability amidst change, and how it was the “new competitive advantage.” In the current climate, it may feel like the only option is to preserve cash and cut more costs wherever possible. However, the HBR quote holds as true today, if not more. Airlines are navigating their way through this crisis and re-evaluating how they do business – because they must in order to survive, short and long term.

The airline sector has proven it is adept at changing; 9-11 forced carriers to introduce new safety measures that would give passengers the confidence to fly again. Change is impacting the airline industry once again. Temperature checks, antibody testing, and enhanced sanitizing are all vital steps to ensure passengers feel safe - and are safe to travel.

Firstly, vouchers must be easier to administer and use. There should be tighter coupling between reservations and payment systems to eliminate current costly and cumbersome processes and help airlines better manage a crisis. Travellers will also expect a higher level of digital interaction, like e-coupons and digital wallets, as they’re used to with companies in other industries today.

Vouchers must offer a compelling alternative and deliver greater value than the original purchase. Some carriers have started giving travellers a % incentive to convert their ticket into a voucher for future use, instead of an immediate refund, but that is just the start.

Creating vouchers for a new travel reality requires a new approach to value-creation – for the traveller and the airline. Vouchers should be flexible enough to meet different traveller needs, and be:

• Valuable: Offer higher perceived value than flight purchase with mileage deposit to frequent flier account, or the ability to earn extra miles or more on future travel
• Digital: Linked to a customer profile to enable personalised offers and one-click payment
• Transferable: Provide options to spend against non-flight products across partner network, or ancillaries

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