12 Aug 2020
Posted in Travel & Tourism
Particular airlines could emerge unscathed from poor handling of refunds, says GlobalData
Airlines across the globe have had to make a swift decision between protecting cash reserves by holding on to refunds or providing customers with timely refunds in order to retain loyalty and boost their image. Two prime examples of airlines that have recently received negative attention for their refund processes are Air Canada and Ryanair. Both airlines have been accused of holding on to refunds for an extended amount of time, leaving customers in the dark. Delaying refunds is less of a risk for these airlines due to how they are positioned in their respective markets. says GlobalData, a leading data and analytics company.
Ralph Hollister, Travel & Tourism Analyst at GlobalData, comments: “It is likely that customers currently complaining about these airlines will still use them in the near future. This is due to the two most influencing factors for travelers when self-packaging a holiday – accessibility and affordability. As a low-cost leader in international travel, Ryanair has developed a no-frills strategy that has enabled international travel to become accessible for a wider range of consumers. According to GlobalData’s 2018 Q3 Consumer Survey, 58% of Europeans assemble their holiday based on affordability. Although these consumers will be experiencing lengthy waits for their refunds, they will be likely to use Ryanair again as its (and easyJet’s) prices cater for their budget.”
In the case of Air Canada’s customers, the Canadian airline market largely remains a duopoly. According to the same 2018 Q3 consumer survey, 36% of North American travelers assemble their holiday based on accessibility, which was the second most important factor after affordability. Air Canada and WestJet Airlines command more than 80% of domestic traffic. For this reason, Canadian travelers have access to a lack of alternatives, meaning that Air Canada at least provides travelers with accessibility.
Hollister adds: “Delaying refunds is a calculated risk that not all airlines can get away with. An airlines position in the market needs to be carefully assessed to ensure that this strategy will not have a detrimental impact on long-term viability. It is well known that customers do not forget negative experiences, but price is king and accessibility is becoming ever more important in an increasingly globalized society.”