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 are accused of holding on to refunds for an extended amount of time, leaving customers in the dark.
According to GlobalData, delaying refunds is less of a risk for these airlines due to how they are positioned in their respective markets.
Ralph Hollister, travel and tourism analyst at GlobalData, commented: ?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 travellers 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.?
Meanwhile, 36% of North American travellers 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.
Hollister added: ?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.?
