Research conducted by FairFly shows that millions of dollars are still tied up in flights that are unlikely to ever be flown. With government advice and travel restrictions extending month-over-month, prioritising and organizing refunds is high on every travel manager’s agenda right now.
As IROPS, repatriation and duty-of-care priorities abate, the financial implications and liquidity are fast becoming the most important issue in travel management.
FairFly Vice President of Marketing, Chris Ulph, spoke to Business Travel News last week to talk about the structural changes in the travel industry and the innovation that can support every facet of this unfolding situation.
Maximizing air fare refunds
Having deployed a module to the FairFly platform that automatically tracks refund policies, Chris and FairFly’s data analytics team were able to show that if a typical client of theirs cancelled the next 60 days of flights from 1st April 2020, FairFly clients would be able to leverage changing refund policies to achieve a 64% net refund on their committed air spend. Compare this to 2019; where we see around 30 – 40% of committed air spend refunded.
FairFly have been providing this through reporting whilst their developers were busy building the platform module; in the 60-days preceding April 1st this year, our clients have managed to achieve a net refund of around 74% of their committed air spend.
Support staff, front-line staff and agents at Travel Management Companies are at a high likelihood to have been furloughed during the COVID-19 epidemic to ensure reduced cash burn. This presents a challenge to Travel Managers wanting their TMC to be more responsive now than ever when processing refunds and cancellations. Dripping a triaged list of urgent or high-value PNRs to be cancelled rather than an all encompassing spreadsheet needs to be the tactic used to avoid hitting bandwidth.
Some TMCs with a presence in North America may be far more familiar with airline vouchers than the rest of the world, but with millions of dollars worth of vouchers now awaiting the ‘day after tomorrow’ it will be important to triage and manage the expiry dates and terms now to have a logical system when business travel starts returning to normal.
Future pricing strategies
Vouchers ensure immediate liquidity by avoiding direct cash refunds but in the long term the utilization of these vouchers will cause pricing issues for airlines as they seek to mitigate losses.
“Expect pricing volatility while algorithms seek to catch up with fluctuating supply and demand combined with a plethora of travel vouchers” Said Ulph, “This could be one of the best times for price assurance products to ensure market volatility doesn’t undo the financial achievements of travel managers in H1”.