Loyalty and CRM

How to digitally transform travel credits management for your airline

How to digitally transform travel credits management for your airline

Travel credits — certificates, vouchers, and future flight credits, among others — are widely understood in air travel. But due to the sheer volume of travel credits issued after the onset of COVID-19, travel credits have emerged as a problem for just about every airline. Since 2020, airlines issued or continued to owe customers roughly $20 billion in credits or refunds, CBS News reports. In 2022, both airlines and customers struggle to keep track of the myriad travel credits in the market.

The situation is no better for customers. They are struggling to redeem credits due to lost codes, complicated websites, and disparate methods for different types of credits. Call centers have become overwhelmed with frustrated customers who have time-sensitive needs, and customer complaints reached unprecedented levels from 2021 to 2022.

A systemic problem among airlines

The source of these problems is now clear: Poor travel credits management is a systemic issue, one that hurts both airlines and their passengers. Fortunately, airlines have an opportunity to:

  • modernize their travel credits management via a digital wallet
  • provide better win-win offers in exchange for travel credits
  • build better relationships with their customers within a closed user group for travel credit exchanges.

So how can a next-generation digital wallet help airlines transform travel credits management for greater value retention and a better customer experience?

5 key elements of a successful digital wallet for travel credits  

There are technologies available today that make a unique digital wallet for travel credits possible — a truly modern approach to travel credits management. But it's difficult to identify and understand these solutions, let alone determine which is right for your airline.

As you look to identify your own digital wallet solution, consider the following five key elements of future travel credits management success. In doing so, you will discover how the right digital wallet solution can align with lasting customer value and measurable results for your business.

The solution puts the customer experience first 

Customers should be the central focal point of your digital wallet solution, which will eliminate the confusion, frustrations, and inefficiencies of old travel credits management techniques. The right digital wallet will free customers from searching through emails, calling customer support numbers, or retaining specific codes to access different types of travel credits.

Instead, customers enjoy a unified experience accessible via your mobile app, a dedicated web portal, or other digital channels. Customers can also access the same information via traditional call centers, if necessary. Most importantly, customers gain easy access to a variety of win-win offers—alternatives to cash refunds that are desirable for both customers and airlines.

You can change travel credits redemption rules as needed 

Again, a successful digital wallet will create a closed user group that facilitates adaptable, win-win offers for customers that are preferable to cash refunds. But customer preferences and business priorities evolve, so airlines must adjust offers to accommodate these changes.

A successful travel credits wallet will support this ideal redemption strategy. The airline can adjust, add, or remove exchange options easily, responding to market changes and changing business goals in real time. The wallet makes this possible through simple backend processes, as airlines use this flexibility to create new, incremental revenue opportunities.

Customers can exchange credits for flights, ancillaries, and third-party products, if you choose 

Your customers should be able to exchange travel credits for anything you choose to offer them, accessible through a single portal. A well-suited digital wallet features backend flexibility and seamless integrations, enabling you to introduce new flight, ancillary, and third-party exchange options (e.g., discounted ground transportation). You should also have the flexibility to enable or disable cash and credits combinations on your choice of special offers.

Customers can exchange credits for loyalty points or miles, if you choose

Airline loyalty and travel rewards programs remain one of the most popular and highly flexible benefits for airline customers. The right digital wallet will enable airlines to activate, modify, and deactivate exchange options from travel credits to loyalty points or frequent flier miles. Generally, your wallet should allow you to build more personalized relationships with customers through these methods, based on unique contexts — when issuing travel credits to certain loyalty program members, in this case.

The wallet supports any new win-win that you choose to create 

With the right solution, you never risk disrupting your closed user group. As new and unique market conditions emerge, you can seize upon opportunities, creating new win-win offers within your digital wallet. This empowers you to create new strategies using travel credits, based on business goals or market conditions.

For example, you may want to offer targeted, short-term promotions. You may wish to incentivize customers in a certain region with a 10% increase in travel credits value or to offer travel credits discounts on specific routes during shorter seasons. The right digital solution creates a seamless environment where you can put these strategies into action — quickly and easily.

From systemic problem to customer experience success 

Closed user groups are already driving key business metrics such as customer satisfaction, cash retention, and spending increases from otherwise infrequent customers. An airline digital wallet that can enable these capabilities is a leap forward from the quagmire so many airlines find themselves in today. Fortunately, technology is no longer a barrier to successful travel credits management.

Author Info 

Scott Hinshaw is an airline industry veteran and a loyalty expert. Scott's 20 year career at American Airlines included leadership roles in Revenue Management, Cargo, Digital Marketing, and culminated as a member of the leadership team for AAdvantage, the world's largest and oldest loyalty program. Scott also led a startup in the loyalty space, creating the first loyalty program for colleges. Scott joined IBS in January as the leader of the loyalty product for the Americas. In his free time, Scott is a father to his three college-age children and his two dogs. Scott and his wife Julie have been married for 26+ years. They love to travel and have Israel and Australia next on their list of destinations. 

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