A new Amadeus study suggests that ‘Pay When You Fly’ options could be used to boost 2021 travel, softening the risk of cancellation that 81% of travellers say is a barrier to booking travel this year.
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 have resulted in uncertainty for those travellers seeking to redeem them.
Now, a new study 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 the road to recovery.
81% 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%) and the inconvenience of the refund process (38%) topping concerns when a flight is cancelled.
According to the report, a “major European carrier” has taken the lead with a ‘Pay When You Fly’ (PWYF) option.
Okay, so how does it work?
PWYF would allow travellers to make a flight reservation (which also includes a hotel or car hire) with a small deposit, in the region of 10-20% of the total cost (which is non-refundable in the event the traveller decides to cancel).
The balance is then settled a few weeks prior to departure, minimising the risk of cancelation. Importantly, the traveller does not enter a credit agreement and is not liable to pay the entire balance.
In the event of cancelation, the airline is not faced with a high number of refunds to process because the bulk of the traveller funds remain with the traveller until the last minute.
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 traveller to enter a credit agreement for the entire balance (24%).
The company said that as well as building confidence by overcoming refund uncertainty, PWYF could boost industry revenues with travellers willing to spend 36% more per trip on average, and 49% of travellers more likely to add additional services like meals and bags, if PWYF is offered by the airline.
What do you think about Pay When You Fly? Do you think it’s a win/win for everyone? Will it catch on? Let us know your thoughts. Email editor@karryon.com.au.
Research was carried out by Opinium on behalf of Amadeus during May 2021 based on a survey with 5,000 travellers*, drawn in equal numbers from France, Germany, Malaysia, the UK and the US.
*Respondents travelled at least three times a year before the pandemic.