Flight cancellations do not seriously affect reservations

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Flight cancellations do not seriously affect reservations
Source: Belvera Partners
July 13, 2022

According to a Nium report, returns for both flights and hotels in June were only slightly higher than in May, at 1.87% vs. 1.73%

Reading the news headlines about the "air chaos" that has recently occurred in Europe and North America, you might think that no one is reaching their destination. But how many flights are actually canceled as a percentage of the total? Is it also causing hotel cancellations? And what is the broader impact for the travel industry?  

Spencer Hanlon, Global Head of Travel Payments at B2B payment provider Nium, comments: "We process significant volumes of B2B payments between tour operators or travel agents to settle with airlines and hotels around the world, particularly in Europe and North America. , and when a refund happens we know it.The reality is that, despite all the negative news, both flight and hotel refunds in June were only slightly higher than in May, at 1.87% compared to 1.73%. 

"And from what we've seen in July so far, it's only increased back a small amount, so we estimate that in July cancellations will go down to just 2.38% (less than one in 40 bookings). Yes this seems high to you, these figures are in line with what we would have expected in a pre-COVID summer. 

"However, with further disruptions expected this summer in the form of strikes and mass cancellations by many major airlines, it is clear that travel vendors and providers need to prepare for increased returns. For many travel companies, Whether they are intermediaries or suppliers, returns are problematic not only because of the loss of income, but also because of the administrative headaches that they entail. 

"Smart companies have long since digitized and streamlined their payment and refund processes, allowing them to cope with this volatility. But there is still time to change, who knows if that volatility may be just around the corner?" ?" 

Carlos Cendra, Director of Marketing and Sales at travel intelligence provider Mabrian comments: "This Nium data broadly matches what we're seeing in terms of airline scheduling. Yes, there are a very high number of canceled flights in all of Europe talking about absolute figures, but in terms of the global percentage of canceled flights the figures are quite low. 

"If we look at the recent cancellations of scheduled flights, comparing the June 14 schedule to the June 28 schedule for flights July 1-15, the highest percentage we've seen is easyJet, which has canceled around 5% of flights, but in the case of some airlines, such as Air Europa, that figure has been as low as 0.5% Also, keep in mind that many of the canceled flights are being relocated to alternative flights , so the majority will continue to arrive. 

"However, a potentially very worrying issue is that delays - or even just the perception or risk of delays - could lead travelers to have totally unfair and unjustified negative perceptions about the destinations they travel to. This would affect their chances of returning to that destination or recommending it to a friend. We're keeping a close eye on the social media tracking tools we have to see how visitors' perceptions of destinations evolve in relation to air delay news."

Alice Ferrari, Founder and CEO of Kyte, an API used by airlines to sell NDC content, comments: "Flight disruptions this summer are occurring in unprecedented volumes with a huge impact on travellers. Delays, Missed connections and lost luggage are causing a lot of stress for passengers heading to their long-awaited vacations.Unfortunately, airlines and suppliers have had to balance cutting costs to survive the pandemic, while trying to predict the return of travel demand.

“Clearly, traffic has not returned gradually, which has caught the industry quite unprepared for the underlying challenges that have led to the need for cancellations and delays.”

"Current gaps highlight the need for much better tools to manage basic customer service. There are many opportunities to incorporate technology that enables seamless rebooking, providing passengers with real-time digitally updated information, which automate refunds when needed, offer travelers options like alternative routes through an app, use AI and bots to answer simple queries, and much more." 

"What is the only way for these systems to work? They all have to be able to connect and exchange information."

"Although the airline industry is often criticized for its lack of technology and slow innovation, people often do not remember how deeply complex and interconnected each system is and how all systems depend on each other. This is often the cause of the slow implementation of modern tools".

"At Kyte we envision a world without queues or counter agents manually processing each passenger. However, we are not far from a world where travelers can self-serve and manage their alternative options on their own devices. Evolution is happening." but slowly."

Leyla Allahverdiyeva, CSMO of RoadRunAir, a private jet tour operator, comments: "Travellers seem to be more concerned about cancellations, lost luggage and delays when booking their holidays at the moment, something we are clearly hearing from our travel advisor partners. We've seen an increase in inquiries and bookings lately, as travel advisors know we use private airport terminals and our own private planes, and their customers feel more comfortable with this experience."

Fabián González, from Forward_MAD, a luxury tourism conference to be held in Madrid in October, comments: "In general, the luxury sector is not as concerned about cancellations and delays as the package travel and tourism sector. general". 

"Firstly, because the problems are focused on low-cost airlines, such as easyJet and Ryanair, and secondly, because it is the package tour destinations that are the most affected. In both cases, luxury travelers are not usually the target market". 

"When we look at Madrid, for example, the main departure destinations for luxury travelers are places like the Middle East, New York or Los Angeles in the United States, or Mexico and Colombia in LATAM. Those travelers arrive with traditional companies and those routes are profitable, so airlines aren't cutting back there yet."

"Meanwhile, traditional private jet companies are in good shape and poised to break another record year, while new business models and startups in the private aviation segment are definitely gaining traction thanks in part to this chaos".


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