Amadeus has unveiled in a new research that ‘Pay When You Fly’ (PWYF) is the most appealing payment option for travellers.
According to the press release, periods of high cancellation during the pandemic have led to problems refunding travellers, with some refunds taking many months to process. To preserve vital cashflow, travel companies 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.
The new Amadeus study highlights the impact that ‘refund uncertainty’ is having on traveller confidence and bookings during 2021, as the industry begins its recovery. Moreover, 81% of travellers confirmed that the increased risk of cancellations due to the pandemic is a barrier to booking travel this year, with refund uncertainty (46%) and the inconvenience of the refund process (38%) topping concerns when a flight is cancelled.
Consequently, several airlines are taking proactive steps to overcome refund uncertainty through innovative new payment options. For instance, a major European carrier has taken the lead with a ‘Pay When You Fly’ (PWYF) option, allowing travellers 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.
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 traveller 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 travellers 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.
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 cancel). The balance is then settled a few weeks prior to departure, minimising the risk of cancelation.
Importantly, the traveller does not enter a credit agreement and is not liable to pay the entire balance. In the event of cancellation, the airline is not faced with a high number of refunds to process because the bulk of the traveler funds remain with the traveller until the last minute.
The research was carried out by Opinium on behalf of Amadeus during May 2021 and is based on a survey with 5,000 travellers, drawn in equal numbers from France, Germany, Malaysia, the UK, and the US.
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