Airlines on Payments Autopilot: How Automation Streamlines the Travel Refund Process

Air travel is complex.

And that complexity trickles down to nearly every customer and airline touchpoint — particularly airline refunds, a process that has become a pressing issue for travelers and airlines.

“Not only do you have a whole range of fare rules and ticket types, but you have various refund policies, including non-refundable or partial refund policies that you have to manage, you have a lot of government legislation, and on top of it all, you have a very complex payment ecosystem, meaning a lot of forms of payment, not just cards, but also things like Apple Pay and so on,” explained Kristian Gjerding, CEO of payment orchestration platform Cellpoint Digital.

This tangled landscape continually creates problems for airlines and often frustrates customers.

While there is no silver bullet to optimize payment refund operations, Gjerding explained that the best transformation airlines can make right now is to “automate as much as possible.”

“If you end up with a lot of manual processing, you are going to also end up with very unhappy customers and will see a loss of income and a loss of revenue,” Gjerding said.

The key, he added, is to “utilize sophisticated rules engines that are integrated into the airline subsystems in such a way that it leads to data integrity across multiple different systems.”

Still, that is a long way to go from where the airline industry is right now.

Peeling Back the Complex Layers of Airline Refunds

With many fare rules, ticket types, refund policies and government legislation at play, navigating the airline refund landscape can be a daunting task.

During the COVID-19 crisis, vouchers emerged as a predominant solution for airline refunds.

“[Vouchers] help airlines do a number of different things,” Gjerding told PYMNTS. “It retains the passenger within their ecosystem, and it’s easier to manage with the airline if they have the system to manage it. But from the passenger’s perspective, it has certain constraints. From the consumer perspective, they would probably like to see a refund of cash fast into the form of payment that they used.”

Airlines already face many different layers of complexity across the entire operational journey. That’s compounded from the traveler’s side by an increasingly complex payment ecosystem.

Gjerding explained that airlines should move “toward a very traveler-friendly environment, where you have a high degree of self-service” during the refund process.

“If you add in vouchers, it’s even more complexity, unless [the airline] already has a voucher system geared towards exactness,” he said. “… [T]here’s a big difference between a free drink voucher at the airport and a [flight] voucher with certain fair rules that is exchangeable for another voucher with similar fair rules.”

That is the main challenge that needs to be simplified.

And “payment orchestration is a core part” of streamlining the complexity, said Gjerding.

The Ideal Refund Program Is Self Service

In the quest for a seamless and automated experience, airlines are exploring innovative solutions to enhance their voucher systems. One such solution gaining traction is the Universal Airline Travel Bank (UATB), which offers a comprehensive platform for voucher systems.

With its robust features, UATB has become the go-to solution for some airlines, enabling them to issue vouchers in various forms, including single-use credit card vouchers that can be used anywhere. Moreover, payment orchestrators are expanding their capabilities to meet the growing demand for voucher issuance, ensuring seamless integration with existing systems.

“Ultimately, [the ideal airline refund] is a self-service environment where the system just issues it straight to my mobile device or device of choice,” explained Gjerding. “And it either puts the money straight back into the payment I used, or if it’s a voucher for a delayed flight, it just gives me my hotel options or food options or a combination thereof.”

He added that today’s consumers and travelers are “pretty sophisticated” and capable of dealing with modern solutions to the airline refund conundrum that don’t require 16- or 20-digit credit numbers or sitting down in front of a computer.

“On a practical level, when airlines aren’t automating these processes, they are losing money because it is a waste of [human] resources,” Gjerding said. “It is a good thing to have automation and sophisticated capable systems that create a great user experience and that are future-proof.”

By leveraging payment orchestration, Gjerding said, airlines can automate their systems and ensure data integrity, creating a simplified and smooth experience for the traveler.