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- New 'Pay When You Fly' options to boost 2021 travel, Amadeus study suggests
New 'Pay When You Fly' options to boost 2021 travel, Amadeus study suggests
81% of travelers say heightened risk of cancellation is a barrier to booking travel this year with ‘refund uncertainty’ the top concern 62% of travelers likely to take-up new ‘Pay when you fly’ options to reduce expo-sure to the refund process
81% of travelers say heightened risk of cancellation is a barrier to booking travel this year with ‘refund uncertainty’ the top concern.
62% of travelers likely to take-up new ‘Pay when you fly’ options to reduce expo-sure to the refund process.
Periods of high cancellation during the pandemic have led to problems refunding travelers, with some refunds taking many months to process. To preserve vital cashflow, travel compa-nies have offered vouchers for future travel, but limited clarity on the lifting of government restrictions has resulted in uncertainty for those travelers seeking to redeem them.
Now, a new study with 5,000 travelers across the world highlights the impact that ‘refund un-certainty’ is having on traveler confidence and bookings during 2021, as the industry begins its recovery. 81% of travelers confirmed that the increased risk of cancellations due to the pan-demic is a barrier to booking travel this year, with refund uncertainty (46%) and the inconven-ience of the refund process (38%) topping concerns when a flight is cancelled.
Several airlines are taking proactive steps to overcome refund uncertainty through innovative new payment options. A major European carrier has taken the lead with a ‘Pay When You Fly’ (PWYF) option, allowing travelers to make a flight reservation (which also includes a hotel or car hire) by paying a small deposit in the region of 15% and then settling the balance a few weeks before travel.
Nicolas Ortiz, Head of Payment Product Incubation, Amadeus Payments commented: “We’re entering a critical phase for travel’s recovery, and our industry needs to build confidence at every opportunity. We believe PWYF will drive traveler confidence, encouraging travel plan-ning and booking even in an uncertain environment with changing government restrictions. The new approach may also result in higher value bookings because travelers only need to make the balance of the payment when it’s clear the flight will depart as planned.”
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 traveler to enter a credit agreement for the entire balance (24%).
As well as building confidence by overcoming refund uncertainty, PWYF could boost industry revenues with travelers willing to spend 36% more per trip on average, and 49% of travelers more likely to add additional services like meals and bags, if PWYF is offered by the airline. Learn more about how new flexible payment options are boosting travel’s recovery in ournew report .
About Pay When You Fly
PWYF refers to a novel payment option that sees the traveler pay a small deposit, in the region of 10-20% of the total cost (which is non-refundable in the event the traveler decides to can-cel). The balance is then settled a few weeks prior to departure, minimising the risk of cancela-tion. Importantly, the traveler 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 re-funds to process because the bulk of the traveler funds remain with the traveler until the last minute.
About Buy Now Pay Later
BNPL refers to deferred payment options where the traveler enters a credit agreement, typi-cally with a third-party fintech company, and is liable for the entire balance of the booking. Payments tend to be made in instalments up until the date of departure, with the primary benefit for the travelers being the ability to spread the cost of the trip over a longer period.
About the research
Research was carried out by Opinium on behalf of Amadeus during May 2021 based on a survey with 5,000 travelers*, drawn in equal numbers from France, Germany, Malaysia, the UK and the US.
*Respondents traveled at least three times a year before the pandemic.
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