As the world grappled with the profound impact of COVID-19 in early March 2020, a parallel challenge emerged in the travel industry - cancellations and the subsequent responses from airlines, travel agents, and travel management companies (TMC’s.)
The International Air Transport Association (IATA) estimated that in Q2 2020, airlines faced a significant cash crisis, with a major factor being $35 billion in refundable tickets owed to both consumer and business travelers globally.
Now, businesses are gazing towards the future, planning for a return to normalcy. They're keen on understanding the airline refunds they're entitled to, ensuring their cash liquidity remains robust.
A Gradual Return to Travel
While there's been a slow resurgence in both leisure and business travel, initiatives like vaccinations have bolstered optimism for leisure travel's comeback in 2021. A recent travel trend report revealed that 42% of respondents felt more hopeful about travel's future due to positive news about a Covid-19 vaccine.
Business Travel's Trajectory
The Global Business Travel Association’s (GBTA) annual Business Travel Index predicts that by 2025, global business travel will surpass its $1.4 trillion peak from 2019. However, the study also anticipates a 51.5% reduction in global business volume compared to the previous year.
The research suggests that during the early recovery phase in 2021, businesses will prioritize sales travel, followed by service and repair visits to existing clients. Internal meetings will take precedence over external conferences, events, and trade shows. Meanwhile, travel for employee training and supplier meetings will see a decline, given the rise of virtual alternatives.
Navigating Unused Airline Credits
When the Global Distribution Systems (GDS) restricted agencies from issuing refunds, ORX Travel advised its clients to opt for air credits. In response, many carriers revised their credit expiration policies, extending the standard one-year rule. Data from mid-2020 indicated that ORX Travel clients had $148m USD in available air credits. A significant portion of these credits, approximately 85%, were nearing expiration.
It's crucial to note that information regarding airline credit expiry dates is primarily held by the airlines, not TMCs or travel agencies. This means airlines must first file the expiration dates with the Airline Tariff Publishing Company (ATPCO) before TMCs like ORX Travel can retrieve and relay that information to clients.
ORX Travel's Proactive Approach
During the initial months of the pandemic, ORX Travel's customer service team processed a staggering number of refund requests, both via the GDS and directly with airlines. To manage this volume, we mobilized an additional 200 colleagues from our customer service division.
Prioritizing our clients' financial health and business needs, we introduced a report for our European and Asia Pacific clients, offering immediate visibility into unused tickets and refunds through ORX Travel's Analytics Studio. This enhancement also improved reporting capabilities for our North American clientele. However, for this to be effective, airlines must first file the credit information.
Addressing the Challenges: Industry Collaboration
The 'Airline Policy Change Working Group' was established in 2020, comprising airlines, GDSs, travel agencies, ATPCO, IATA, and ARC. Their goal is to finalize a taxonomy for incident-specific response policies by the upcoming IATA Passenger Standard conference in September 2021.
Next Steps for Clients
The travel landscape has transformed, and so has the way TMCs and clients manage credits. If you have unused air credits, it's essential to:
- Negotiate directly with airlines if you have a special agreement.
- Proactively manage refunds to prevent potential losses.
- Update travel profiles and credits, especially if employees depart.
- Consult directly with airlines to confirm their current ticket validity policies.
