According to GlobalData, travel companies are going to have to provide flexibility or risk being left behind.
The data and analytics company pointed to the recent announcement that Delta Air Lines was joining American Airlines and United Airlines in scrapping a range of ticket-change fees.
GlobalData travel & tourism analyst, Ralph Hollister observed that: “Last year, Delta accumulated US$830 million in change fees, more than any other US carrier. After suffering a pre-tax loss of US$7 billion in Q2 2020, the last thing Delta needs is to be closing off such a valuable revenue stream.
“However,” Hollister continued, “the US airline industry was already hypercompetitive pre-COVID-19, and with airlines now battling for dominance in a severely reduced market, airlines such as Delta have no choice but to match competitor offerings, or risk being left behind permanently.”
In its most recent COVID-19 recovery survey, GlobalData reports that 53% of global consumers are either ‘quite’ or ‘extremely’ concerned about restrictions on local and domestic travel and 49% echo this sentiment for restrictions on international travel.
It points out that this substantial level of concern around domestic and international travel restrictions has severely decreased traveller confidence, causing many consumers to cancel the entirety of their holiday itineraries for 2020 and possibly in to 2021.
And, says GlobalData, to stop this accelerating trend, travel companies need to be as flexible as possible, even if that does mean cutting off valuable revenue streams in the process.
As Hollister explains it: “Companies operating in a range of sub-segments within the global tourism sector have been dramatically changing long-standing policies around cancellation and change fees. This is to provide travellers with the new must-have when booking a trip in the ‘new normal’ – flexibility.”
He continues: “Although cancelation and change fees help boost major travel companies’ top lines, flexibility is now a necessity for unsure travellers. Companies will now have to cater for this need as supply is undoubtedly exceeding demand in all areas of travel and tourism, creating a buyer’s market in the process.”