Managing corporate travel involves a lot of moving parts, and cancellations are sometimes unavoidable. When your corporate travelers need to cancel an airline ticket, it’s important to understand the policies and how they impact your travel program. Here’s a breakdown of what happens when a ticket is canceled.
Adhering to airline policies
AllFly adheres strictly to each airline’s cancellation policy. While policies can vary, they generally follow a similar structure across North American airlines. Understanding these policies can help you navigate cancellations more smoothly.
Non-refundable fares
For non-refundable fares, canceled tickets typically convert into eCredits stored in the traveler’s profile. These eCredits are non-transferable, meaning the company cannot recapture the value for use by another traveler. Instead, the original traveler must use these credits for future travel within the airline’s specified timeframe.
Refundable fares
If you’ve purchased refundable fares, the canceled tickets will be refunded back to the original form of payment. This option provides more flexibility but comes at a higher cost.
Here is an example from American Airlines
To illustrate this mechanic, on American Airline's website, you can pay extra to make a fare refundable. If you pay extra, in the event of a cancellation, the fare value will be return to the original form of payment.
The math says to avoid purchasing refundable fares for your entire group
Most corporate clients opt for non-refundable fares due to their lower cost. Refundable fares are more expensive, and since cancellation rates for corporate events tend to be low, it often doesn’t make sense to pay the extra cost. Let’s break down a case example to illustrate this:
Case Example:
• Internal Cancellation Rate for Corporate Events: 5%
• Average Increase per Ticket to Make a Ticket Refundable: $125
• Group Size: 100 people
• Average Ticket Cost for Event Travel: $648
If we were to make all 100 tickets refundable, the additional cost would be:
100 passengers times $125 = $12,500
On average, with a 5% cancellation rate, we expect 5 out of 100 people to cancel:
100 times 5% = 5 cancellations
The cost of the canceled non-refundable tickets is:
5 passengers cancelling tickets times $648 = $3,240 of potentially lost value
Comparing the costs:
• Cost of Making All Tickets Refundable: $12,500
• Cost of Eating the Cost for Cancellations: $3,240
By choosing non-refundable tickets, the company saves:
$12,500 - $3,240 = $9,260
This simple math shows why it’s often more cost-effective to purchase non-refundable tickets and absorb the cost of a few cancellations rather than paying the premium for refundable fares. This approach maximizes budget efficiency while accommodating the relatively low cancellation rate for corporate events.
With that said, it is often advisable to make certain people or routes purchased refundable. For example, if there are employees at risk of being terminated, its best to upgrade their tickets. Also, if there are expensive tickets (like international), it may be wise to make those refundable.
Creating Internal Travel Policies
Companies can establish internal travel policies to manage what happens when employees receive eCredits for canceled tickets. These policies can outline how and when eCredits should be used, ensuring they are not wasted and that employees are aware of their responsibilities regarding canceled tickets.
Consistent policies across booking platforms
Whether you book directly with the airlines, through Expedia, or another corporate travel booking tool, the cancellation policy remains consistent. Understanding and communicating these policies to your travelers can help streamline the cancellation process and minimize disruptions to your travel plans.
In summary, while cancellations can be a hassle, knowing the policies and planning accordingly can mitigate some of the challenges. AllFly is here to help you navigate these situations, ensuring your corporate travel program remains efficient and effective.
Summary
AllFly adheres to each airline’s individual policy and will make our best effort to communicate those policies to you. In general, here is what happens to the refund when someone cancels a ticket:
Non-Refundable Fare: The traveler receives an eCredit on their individual profile for future travel.
Refundable Fare: The refund goes back to the original form of payment.
By understanding these policies and planning accordingly, you can better manage your corporate travel program and minimize disruptions. AllFly is committed to helping you navigate these situations efficiently and effectively.