Those of us that have been around in the corporate travel industry have seen large scale travel disruption before. The 2010 eruption of the Eyjafjallajökull volcano in Iceland caused 20 countries to shut down their airspace for 6 days. The recent Hurricane Harvey inflicted $125 billion in damage, shutting down businesses and travel across swathes of the Americas. However, none of us have witnessed disruption at the scale and timespan that we’ve seen in 2020.
Irregular Operations (IROPS) have unfortunately been a bit too normal this year.
The huge volume of trip cancellations, either instigated by the airline, governments or by the traveler, have left many corporates chasing refunds for flights that were never going to be flown.
Airlines have had to cope with significant economic pressures and have sought to retain as much liquidity as possible.
A secondary effect of the disruption caused by COVID-19 travel restrictions presents Travel Managers and Financial Controllers with significant challenges in tracking the outcome of booked flights – especially those that may have had segments canceled on valid PNRs. Given the wide-ranging changes made to refundability rules by different airlines, understanding how much air spend on the canceled flights they could recuperate, either directly as an immediate refund, as a credit of soft dollars to UATP accounts, or as reusable unused tickets.
While some Travel Managers were able to wade through countless CSV or Excel files, I personally have been on many calls and have been told there are still huge blind spots into the disrupted trips. Further to that – many are expecting additional challenges as business travel ebbs and flows over the next year.
COVID-19 and the unused ticket challenge
To understand the challenges that the pandemic has already brought, and to foresee that ones that it may further create – it is worth looking at a timeline and mapping out the most likely scenarios:
In collaboration with our partners, FairFly is looking at three main phases for the disruption and its recovery:
- The peak of the first wave – when a sheer volume of planned trips were canceled
- Travel picking up – when muddled recovery has started with widely variable fare rules
- Travel volumes resume – when business travelers are flying at a significant volume again
To compound the issues, the three main phases aren’t necessarily linear and in some countries, the situation may move backwards and forwards in the timeline above.
In this first of three blog posts we’ll address the first unique challenge felt by Travel Managers.
Phase 1: The peak of the first wave
In March and April 2020 our beloved industry came to a grinding halt. Most business trips were canceled. While navigating through furloughs and reality of what legislative travel restrictions meant to them as well as challenges of working from home – Travel Managers began trying making sense of their travel programs.
The first challenge Travel Managers have been facing, and many cases still are, is to understand what ended up happening to their disrupted trips. Simply put – were the flights scheduled for March and April ever flown? Were they postponed to a future date (exchanged)? Or most likely canceled?
While it seems a rudimentary question that should be easily answered by TMCs. We should remember that, just like their clients, TMCs have never coped with such mass disruption either, and should be given a thumbs up for their own navigation through furloughs and major business decrease. Technology isn’t always in place to automate global visibility into cancellations at such an unpreceded scale. This is especially true in parts of the world where tickets are inherently less flexible than their counterparts on North American carriers.
The solution to global IROPS was to stitch together multiple reports, often across multiple-TMCs and fragmented data sources. Raw data was easy to come by but the standardization and analysis of them wasn’t.
As we see above, the situation arose with unprecedented volumes of vouchers and unused tickets being generated. For many travel managers, this is a time-consuming and manual reconciliation that whilst partially answers to this challenge does not always show the full picture.
The immediacy of a snapshot required at the end of April was found but serves to highlight an area where technology companies such as FairFly as well as TMCs needed to automate and bridge the data gap.
Tracing the refunds
Having answered the question of what happened – whether using a tried and trusted spreadsheet or working with a company such as ours – the next question, certainly on our clients lips, was so where did the money go?
With millions of dollars committed and remitted determining the resultant outcome of mass cancellations was the next challenge faced by our clients. Simply put – where is the money? Has it been refunded? Credited in a UATP? Captured as a voucher in the form of an Unused Ticket? Lost? Or just forgotten about and is waiting to be actioned?
To most other industries this could be a reasonably trivial question, however not so in the world of corporate travel. There are a multitude of methods being practised across the industry when it comes to canceled flights using a plethora of disconnected technologies.
There are potential commercial conflicts of interests across the different parties: Your company, your travelers, the airlines, the TMCs. Each of which attempting to try and figure out how to carry on their business at such a challenging time.
We’ve heard stories that some airlines have asked travelers to take vouchers instead of immediately refunding the canceled flights. Some airlines could just not provide a Travel Manager with the record of their flights that got canceled. In the most concerning reports, refunds have been returned to the traveler when flights were booked using a central purchasing account.
I can certainly vouch for the difficulty in solving this problem – perhaps to the credit of being independent we’re in a fortunate position to be able to aggregate across multiple TMCs, all the GDSs and with some back end magic produce what our clients are looking for.
In the next part of this post I’ll take a look into Phase 2 & 3 of the disruption, focusing on the unique challenges and potential solutions that we might see once traffic resumes.
Editor: This was part one of two discussing the challenges of unused tickets in our industry; we’ll update this with part 2 which will talk about the future scenarios as well as some of the solutions found by our R&D team.