By Branchspace & InteRES | 8 October 2020
For the airline customer, booking a flight has historically been the most definitive stages of trip planning: once booked, the journey is set in stone. Whenever life got in the way and the passenger needed to cancel their flight, they generally understood that their last-minute flight change would incur a fee. Sometimes they missed the fine print of their cancellation policy and were disappointed to receive a smaller refund than what they originally paid.
While understandable from a revenue perspective, these practices have recently proved unsustainable.
The overwhelming majority of passenger cancellations nowadays are an absolute and enduring consequence of crisis, stemming directly from the collapse of demand coinciding with lockdown impositions and the chopping and changing of quarantine restrictions. While some airlines took a step in the right direction with waived change fees and relaxed cancellation policies, these are temporary measures and arrive too little too late for travellers seeking refunds for airline-cancelled flights.
Abandoning hard-coded fares
Restrictions and cancellation policies damaged the passenger experience long before the pandemic hit. Flexibility is the obvious customer-centric remedy.
What if rebooking and refunding was not fare rule, but an airline service?
If airlines abandon the whole concept of hard-coded fares, they would enable fuller fare flexibility for passengers. For airline revenue teams, this is a positive shift to operating with creativity and experimentation in the customer experience, and possibly an opportunity for monetisation.
Consider first a complex, but relevant, scenario: from a booking for four passengers, two need to cancel their flight due to sudden quarantine restrictions. The current system was not designed for the rules to break automatically, so the case would require a human customer service agent to perform an override. Any automation tool the airline had in place would only digitise the problem.
When we treat rebooking and refunding as a service, first of all, we make the process more understandable for consumers – although the number of possibilities of how we define this flexibility for specific markets, products or customer segments will increase. We also remove the dependency on customer service agents: then there would be no need to override the system or the fare rules, as all parameters (i.e. the complete business logic) would sit within the defined service. By equipping the customer with true self-service tools and simplifying painful rebooking flows, we restore customer confidence and ensure receptivity. A customer that feels more in control of their booking experience would likely respond more positively to cross-selling and upselling.
Furthermore, we do not need to extirpate the entire booking system. It is entirely possible to implement the rebooking and refunding service with a closed user group, and deliver measurable, targeted benefits.
Removing the hardcoded aspect of rebooking and refunding opens the door to invention in the customer experience. For example, airlines could adapt subscription-model strategies to reduce churn, and utilise exit surveys to optimise alternative offers more effectively. Customers identified as more receptive to rewards could receive more enticing incentives than just vouchers, such as temporary promotions to elite status for an extended period.
In addition to a better customer experience, airlines will gain a toolbox: if flexibility services become more like insurance with several commercial settings, more options can be created and hence a higher monetisation is possible as compared to a rather narrow set of options in the world of hard-wired fare rules.
By fine-tuning aspects of the customer experience with services that provide actual flexibility, airlines would establish a stronger, more meaningful balance between increasing passenger satisfaction and managing revenue streams.
As long as passengers have a choice of airlines to fly, the digital experience will play a deciding factor. The quality of the booking experience, in turn, is dependent on the degree of flexibility which an airline provides. When we pair the removal of hardcoding with 100% online self-servicing on the front end, we add value to the passenger experience. Ultimately, airlines can restore consumer confidence in booking travel with experiences that promote trust and painless cancellations, and of course, a system that allows for fuller flight flexibility.
Learn more about how we enable travel providers to transform their digital experiences below, or get in touch.
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