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Your company should NOT be buying refundable tickets for meetings or incentive trips.
The math doesn't work out in your favor. Read more about how we saved a client from lighting $10,000+ on fire.
But first, why do companies want to buy refundable tickets versus non-refundable? It has to do with airline rules.
When companies buy a non-refundable economy airline ticket, if canceled, the value of the ticket typically becomes an e-credit on the traveler's profile. The company DOES NOT get the money back directly. This is an airline rule.
However, most TMCs worth their salt will track the ticket credit for future use. Companies simply have to implement clear policies with their employees – stating the value of must be used on a future business trip (AllFly does this).
If a REFUNDABLE ticket is canceled, the amount gets refunded to the original form of payment.
Companies get emotional -- they say, "we want the money back, they are our tickets!"
And we get it -- in this area, the airline's rules are tough for corporate travel. But companies only have two choices,
However, we caution against buying ALL refundable fares. The math is NOT in your favor. Let's dig into an example from a client last week.
They have a program in April to Cancun for 100 people. Our internal traveler cancellation rate across thousands of flights is 5%.
In this program, on average, 5 people will cancel. The average fare will come in around $475 (tons of people coming from ORD). If 5 people cancel and those tickets get converted to eCredits, the company's exposure is $2,375.
To protect against losing $2,375 -- the company considers paying EXTRA to make all the tickets refundable. However, on American, this ads +$138 to the ticket cost (as seen below)
Across 100 tickets, that is an increase $13,800! 🤯 🤯 🤯
The pro move 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 can happen.
But why spend $13k more to save $475 on a handful of tickets?
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