By mid-April, around 100 million passenger journeys had been cancelled due to COVID-19 in Europe alone. Many of these tickets were converted into vouchers rather than refunds, meaning that travelers could redeem them against future travel.
A recent study of finance leaders revealed that a canceled trip costs a company $889 on average. This is partially because companies don’t rebook or claim refunds on unused vouchers before they expire.
Many companies hold a vast amount of unused airline tickets as, inevitably, plans change. But add a global pandemic to the mix – some businesses estimate they have around $1-million-worth.
The reason many companies lose out on unused tickets is that they can be difficult to track. Even if a company does manage to track them, they often assume refunds won’t be possible within inflexible airline policies.
However, many airlines have relaxed their policies in response to COVID-19 – meaning unused tickets could be refunded if redemption isn’t possible before the expiry date. The catch is that these tickets are not automatically refunded; they must be requested.
The below example illustrates the process of tracking unused tickets, and how companies can prevent loss of income.
Trip canceled due to COVID-19
Let’s go back to March this year, and your Chief Commercial Officer has a flight booked the following week from Tel Aviv to New York, via London. However, the client she was traveling to see just canceled the meeting due to COVID.
Your CCO rings your TMC, who cancels the ticket with Airline X. The ticket then becomes ‘unused’; the seat on that specific flight is released back to the airline. However, the airline keeps that paid fare; your CCO is instead issued a voucher to redeem against the purchase of a future flight. Airline X has given a six-month window for redemption.
Segments are cancelled
Next, the airline cancels each segment within your CCO’s booking. A segment is each portion of a booking so, in this case, Tel Aviv to London would be one segment; London to New York another. The same applies to the return journey, meaning there are four different segments to cancel. The airline is now free to resell those seats.
Unused ticket remains active but unrefunded
Throughout the next couple of months, your TMC provides regular reports about your CCO’s unused ticket. However, your company’s COVID travel ban remains in place, and there are no opportunities to redeem.
In the meantime, your TMC is unaware that Airline X has changed its refund policy. Unused tickets are now eligible for a partial refund – but only if the TMC requests this.
Your CCO’s unused ticket remains on the airline’s system, by now unlikely to be redeemed or refunded.
Unused ticket becomes “invisible”
Fast-forward a few months to August. Your CCO’s ticket is still active with the airline, but reporting from your TMC and its GDS has stopped. The ticket has now become “invisible”; there is no way to track what it is, how much money it’s worth and when it expires.
The prospect of a refund is now almost non-existent, as you no longer know your CCO’s unused air ticket even exists.
Ticket validity expires; money is lost
It’s September, and your CCO’s unused air ticket has expired. It is now worthless – ineligible for redemption or refund.
Like many businesses, your company lost track of it. Even if you had managed to track it, you may have assumed the airline wouldn’t refund you. Or you may just have been short of resources to pursue it.
So, how can you receive a refund if you don’t know there’s a ticket to be refunded?
FairFly has deployed a module that tracks refund policies and potential refund amounts based on companies’ passenger name records. An example – FairFly recently found around $200,000 in unused air tickets for one of its clients. This made up approximately 20 per cent of the corporation’s monthly air spend, and it was completely unaware these unused fares even existed – let alone that they could be refunded.
Due to policy changes, the opportunity to claw back money through cancelations is significantly higher than pre-COVID. FairFly’s data shows that in the 60 days following April 1, clients were able to recover 64 per cent of air spending through canceling flights – compared with just 30-40 per cent in the same period of 2019.
So, that’s how corporations could be sitting on hundreds of thousands of dollars of unused tickets – and running out of time to convert them into cash. If your company has a large pool of travelers, consider using a refund policy tracking tool like FairFly’s to gain visibility into unused flights and claim for them before it’s too late.