“Refunds are a $40b challenge, has to be resolved cooperatively”

21^st September, 2020

What has lacked in the airline industry so far has been an innovative and cooperative approach to manage the refund process during this pandemic, according to Tobias Wessels, Founder at Rebound Travel

The coronavirus outbreak created havoc in the travel industry. Travellers understandably opted for refunds and also chose to reverse a transaction, not agreeing with a charge on their respective cards. Airlines have been and in the future, too, are going to be judged on the basis of the way they handle refunds. 

“COVID-19 put all airlines under a severe stress test and accommodating so many customers for cancelled flights is not something that airlines could have envisioned prior to the pandemic,” acknowledged Tobias Wessels, Founder at Rebound Travel.

“Airlines offered to rebook customers which created a worldwide backlash, enormous frustration and lost in trust with airlines. The US DOT and the European Commission then stipulated that airlines have to pay their customers in cash for cancelled flights. While it is the right thing to do, those cash payments put even more stress on the already cash-strapped airlines. In the US more than $20b have to be paid back to customers in cash but the problem also exists in Europe. Lufthansa reported that they had to pay back more than EUR 2.5b to their customers. What has lacked in the industry so far has been an innovative and cooperative approach to manage the refund process during this pandemic,” Wessels told Ai’s Ritesh Gupta in an interview.

To salvage the situation and work on a prudent offering, Rebound Travel has initiated a refund management platform.

Through Rebound, airlines give customers that choice: customers with a pending refund can freely choose between their cash refund and attractive non-cash offers like vouchers, miles, BOGO offers, upgrades or shopping credit. “To motivate customers to choose an alternative to their refund, airlines offer a more attractive offer which could be a USD 2,400 travel voucher for a USD 2,000 refund. In some situations it is less important to offer "more" but the right options: a frequent flier that is 6,000 status-miles away from his or her next status sees more value in reaching the next status-tier immediately versus a flight voucher,” said Wessels.

“Rebound provides the intelligence so that airlines offer the optimal offer type and value that motivates customers to choose an alternative offer to their refund while keeping the airline's opportunity cost as low as possible. We will announce our first partnerships here in the US and internationally very shortly,” shared Wessels.

He shared that the team consists of former airline executives. “It was important to us to offer a suite of solutions where everyone benefits including the traveller on a long-term basis.”

Transparency and Honesty

Several airlines changed their stance to adopt customer-friendly policies, whereas certain carriers didn’t and rather chose to only offer travel vouchers.

“It is great to see that the airlines are becoming more customer- focused in this crisis. Our approach at Rebound has been to involve the customers in the process and create value for airlines and travelers at the same time. Be fully transparent and honest in your process. Your customers understand that you are overwhelmed with the operational burden to process refunds. To encourage people to travel more it is important to regain trust and make it as easy and attractive as possible to fly again. Giving travellers a choice is a good first step, recommended Wessels.

“With Rebound, the airlines retain their cash and ensure that their customers return to them for future travel. That is especially important as your frequent flyers and front-of-the-cabin passengers account for the majority of an airline's profit. We also expanded our platform based on our partners' feedback to not only help during refund cases s but to retain cash in all situation when there is an expected cash-outflow like denied boarding,” he said.

Acknowledging that chargebacks are a long-term industry concern and have been very difficult, expensive and time-consuming to reduce for airlines, he said Rebound provides airlines a unique identifier of customers that choose the refund or one of the non-cash offers. That identifier is then used by airlines and presented to the credit card companies in what is called "representment". With the Rebound ID that validates the original credit card transaction of the customer, the airline significantly reduces or wipes-out the chargeback risk altogether.

As for the response, he said the industry feedback from partners in the US or organizations like IATA has been much better than expected. “We plan to announce our first partnerships very shortly and aim to help any airline to retain cash and strengthen loyalty with their customers. Other adjacent industries like cruises and attractions have shown interest in Rebound as well,” concluded Wessels.

Pitching Contest of Disruptors for the New Normal - Ai Events Virtual Lions Den

Join the Rebound executive team and other attendees from the industry on September 23rd 2020 as part of the session, “Disruptors for the New Normal”:

http://www.airlineinformation.org/upcoming-events2/488-ai-events-virtual-lions-den.html