Covid-19 has thrown the travel industry into uncertainty.

It is not yet known when businesses will be able to begin operating normally again, or the extent of the long-term impact of the pandemic will be. This has created unease for customers with trips already booked, and consequently, has led to some being unhappy with airlines and travel providers offering credit or vouchers instead of a refund.

In most cases, customers are entitled to their money back, but many organisations are making the process laborious and frustrating, and certainly not an experience that inspires future loyalty.

Putting loyalty in danger

Travel organisations are now in jeopardy due to the coronavirus pandemic, resulting in many being unable to afford to offer refunds. However, not all customers are in the position to be able to postpone or re-book trips, even if they would like to, or plan to book again with the company in future. Earlier this month, financial expert Martin Lewis urged consumers who are able to accept vouchers to do so. He stated: “Many organisations are struggling to cope. For those that can afford it, even if you’ve a right to a full refund for a ticket, if the firm is struggling in a struggling sector and it asks you to take vouchers instead, that’s worth considering. That may just be what stops that firm from collapsing and its staff from losing their jobs.”

This does not mean that companies have the right to enforce or even overtly encourage it; those that communicate in a way that is deemed deliberately difficult or dishonest risk alienating customers and losing loyalty.

So far, a large number of airlines and online travel agencies have come under fire for cancellation policies, with many using confusing communication in order to persuade consumers to accept credit. It was widely reported earlier this month that British Airways had removed mention of the right to a refund from its website. At time of writing, it does list a telephone number under the ‘Are You Eligible for a Refund’ section, for customers who had flights cancelled and “do not wish to rebook or claim a voucher” to call and discuss their options. Those customers who wish to cancel a booking and are due to travel before end of July are offered a voucher only.

Tui is another similar example, having recently changed its refund policy so that customers automatically receive credit for any holidays that can’t go ahead. It is now only possible to get a refund once customers have first received the refund credit, and by requesting it on the telephone (where extremely long waits have been reported).

In a recent statement made to Travel Weekly, Tui blamed delays for refunds on staffing and operational issues. It said: “One option currently available for customers is to cancel the holiday and receive a full refund, however there is a delay in this process due to the large volumes of customers impacted, combined with temporarily reduced staffing across the business and limited teams available due to our retail shops and contact centre offices currently being closed with many of our colleagues working from home.”

Elsewhere, Ryanair is delaying giving customers an automatic cash refund, stating that “customers who choose not to accept a free move or voucher will receive their refund in due course, once this crisis has passed.” Unsurprisingly, this vague declaration has resulted in outrage, with customers furious that Ryanair is appearing to resist handing back money indefinitely.

Intrepid Travel is another company under fire for updating its refund policy. It is now giving customers a credit voucher of 110% to be used before 30th April 2022. Its website now states: “As a result of the impact of the COVID-19 virus, we are offering you cancellation options in addition to those available to you under the Booking Conditions.”

In a statement made to the Guardian, a spokesperson for Intrepid said: “This has been a completely unprecedented situation for the travel industry globally, and like other travel companies we have had to update our booking conditions and cancellation policy to adapt to the constantly evolving nature of this … pandemic.”

As well as retrospectively changing terms and conditions, Intrepid has generated further criticism for how it has handled the situation, which is to seemingly bury its head in the sand and ignore customers’ repeated attempts to contact the company. It’s even been suggested that Intrepid has deleted a number of tweets related to customer complaints about cancellations.

Intrepid is an example of how poor communications can impact loyalty. The company could essentially go on to carry out group tours and trips with disgruntled customers who were denied their money back. If it does eventually honour refunds, customers may think twice about booking again with the company due to its resistance, and the arduous process that they were put through. Either way, it’s doubtful that customers will be left with a positive impression of the company.

Transparency equals trust

So, how should travel brand handle the situation? In short, there is no easy way out, so it is vital that organisations practice clear and honest communication with customers. This doesn’t necessarily mean scrapping the option to first offer a voucher or credit, but rather, to always provide an easy and straightforward alternative. Furthermore, companies that are clearly striving to offer comprehensive and quick customer support will also benefit in the long run.

Tour operator Much Better Adventures is an example of how to effectively communicate with customers. With ‘flexibility and reassurance’ a priority, the company is offering customers the option (but no obligation) to postpone trips and rearrange at their own convenience. Further to this, it is offering an incentive to do so, in the form of a 5% lifetime discount for any future bookings. The company will also pledge 5% to its foundation to support local hosts who have been badly impacted by Covid-19.

According to the Guardian, the strategy has resulted in 80% of customers opting to postpone rather than cancel. Of course, it is not possible for all companies to operate in this manner, however, Much Better Adventures shows how far transparency can go when it comes to maintaining a positive brand reputation and customer loyalty.

Hay’s Travel is another brand striving to offer transparency. While it is currently bearing the brunt of customer anger over long delays for refunds, it’s recent statement of apology is somewhat reassuring, particularly in an industry that has seemingly changed the rule book overnight.

The acknowledgement that its customer service has been unsatisfactory, combined with the option to get a refund (and the company working hard on the customer’s behalf to achieve it), is likely to contribute to the company’s future reputation. Indeed, in the short-term, Hay’s Travel says that two-thirds of customers have chosen to reschedule rather than request a refund. For brands that refuse to even give customers the choice, it’s perhaps unlikely that as many will return again in future.