Before purchasing refundable airfares for groups, planners should crunch the numbers says AllFly.
It seems like a no-brainer that meeting planners should purchase refundable group air tickets, since all refunds go directly back to the original form of payment, not to the individual traveling. The value of a non-refundable economy ticket, if canceled, typically becomes an e-credit on the traveler’s profile.
But in fact this is not always a cost-effective policy, says corporate travel management company AllFly. “Save money by avoiding refundable tickets for company events,” says AllFly’s Kenny Totten. “Non-refundable fares, with clear travel policies, prevent costly refunds and maximize savings.”
Totten gives an AllFly case study example of how the math can work out in your favor with non-refundable fares. Consider a spring program in Cancun for 100 attendees, with an anticipated cancellation rate of 5 percent. “In this program, on average, five people will cancel,” he says. “The average fare will come in around $475. If five people cancel and those tickets get converted to eCredits, the company’s exposure is $2,375.” This would lead planners to consider paying extra to make all tickets refundable. However, in this case the added $138 per ticket adds up to an increase of $13,800.
“The pro move,” says Totten, “is to take the upfront savings of $13k. Could you maybe have a traveler or two get a ‘free’ credit for future use? Sure, it could happen. But why spend $13k more to save $475 on a handful of tickets?”
Importantly, concludes Totten, there must be clear policies stating that the value of any e-credits from nonrefundable fares must be used for a future business trip. “Most travel management companies worth their salt will track the ticket credit for future use,” he says.
You May Also Be Interested In…
Frontier to Launch 16 New Routes Next Year
