Automated changes and refunds: Foundational for airline retailing

19 April 2022

 

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If asked to reflect on airline offer innovation in 2022, you might describe shiny new capabilities such as dynamic pricing, targeted ancillaries, customized bundles, and maybe even AI-powered prescriptive offers. And indeed, these are part of the modern airline retailing story. But for this installment of our Offer, Order, Action series, we're focusing on a less shiny—yet increasingly critical—airline retailing requirement: Automated advance change and refundability.

Rules around ticket changes and refunds have existed since the dawn of commercial aviation. Data standards and fare filing solutions (like Categories 31 and 33) have made automation of these rules possible for over a decade. However, it is only recently that advance change and refundability has assumed a leading role—with boardroom visibility—in airline offer innovation and competition for the customer.

Advanced change and refund policies for airline tickets take center stage

Any flight offer—with or without frills, and regardless of channel—must address the question, "Is the flight easily changed, or canceled/refunded if my plans change?" More than ever, in today's post-pandemic world, the answer to that question has a tangible impact on airline offer uptake, distribution channel performance, and bottom-line results.

It's no longer enough for airlines to have a well-defined change policy or a partial implementation of their change and refund attributes, which are codified in Categories 31 and 33 (Voluntary Changes and Voluntary Refunds). To competitively bake change and refund features into their offer, airlines need to file data for all products, which makes it possible to:

  • Support automated servicing in any channel, direct or indirect
  • Allow flight shoppers to filter search and shop for results based on change/refund policy and cost
  • Support effective comparison shopping across airlines and products

ATPCO's 100% Automation Change Design Team, under the Customer Care Council, is accelerating airline adoption of this fundamental policy and attribute data because we recognize that anything less than complete automation does not serve the industry in the best way.

 

Listen to ATPCO’s David Smith explain how 4 factors are driving the race to 100% automation of refunds and exchanges.

 

For Scandinavian Airlines, automated change is integral to cost savings and future offer innovation

Scandinavian Airlines (SAS) was an early adopter of change automation, starting with its initiative in 2010 for direct channels and expanding to agency channels after a PSS migration in 2012. Though not at 100 percent automation, SAS is not far away.

We spoke with former ATPCO Design Team member Ann-Marie Hagerstrom, Manager of Fares Distribution and Development, and Susann Thulinn, Pricing Distribution Specialist, about the airline's experience.

4 ways airlines benefit from the automation of changes and refunds 

Ann-Marie described the top business drivers behind the SAS decision to invest in automation:

  1. Cost savings from reduced manual processing of changes and refunds
  2. Efficiencies gained by consistent application of policies
  3. Increased accuracy of repricing, consistent with the policy intention
  4. Improved customer satisfaction, and adherence to best practices, for transparent change and refund policies for both shopping and servicing offers

According to Ann-Marie, "When we started to file Category 31, we had to take time to analyze 'what is the intention of this policy?' and 'what do we really want to allow?' This was important because in the past, with Category 16, there was a lot left to agent discretion. Now, we were forced to know and define our intention for each scenario, knowing it would be consistently applied."

SAS took incremental steps, testing the market before a broader agency rollout. Positive results were immediately evident: changes and refunds were more accurate using automation.

Automation as springboard to New Distribution Capability and airline retailing

Ann-Marie explained that SAS views its investment in change automation as foundational for the airline's future evolution of New Distribution Capability (NDC). According to Ann-Marie, SAS recognized that a core requirement of all offers and distribution channels was to have the capability for convenient, automated exchange and refund capability. The airline’s early investment in automation makes it easier to now focus on offer and distribution innovation, building on its foundation of consistent, intended policies for changes and refunds.

5 steps toward 100% airline automation of refunds and exchanges

Are you ready to advance your airline's automation journey? Below are five essential tips:

  1. Focus on internal channels first, then expand to the agency channel
  2. Start with straightforward product offerings, like domestic travel
  3. Cover the basics for all products: pre- and post-departure, no-show situations, and whether a fee applies
  4. Find efficiencies by using concepts such as Alternate General Rules, where one set of policies can be applied to many of your offered products
  5. Engage with your travel agency channel partners and their technology providers, encouraging them to leverage your data and standards for automated change and refund tools

Please email me about your experiences automating your change and refund policies or any other feedback on this blog series.

If you're interested in getting involved in this industry conversation, please consider joining the ATPCO Design Team for 100% Automation of Changes. This group is composed of airlines, subscribers, and channels dedicated to advancing the automation of changes to benefit consumers and the industry at large. I hope to see you there!

Offer, Order, Action

This blog article is part of a series. Check out the other articles:

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By David Smith

David Smith, Head of Industry Standards, has 28 years of experience working in the airline industry in the travel distribution ecosystem. Within 10 years at a major European airline, and 18 years at ATPCO, he has experience in finance, business process re-engineering, program management, commercial negotiation, data distribution, and standards creation and management. He is also a board member of the US-based Society for Standards Professionals.