Why Wouldn't Delta Incentivize Vouchers over Refunds?
#1
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Why Wouldn't Delta Incentivize Vouchers over Refunds?
Yes, a bit of playing "Armchair CEO" here, but as the question notes, I wonder why Delta isn't incentivizing vouchers over refunds as a way to hold on to cash when travelers are otherwise entitled to full refunds. I will note that some European airlines are doing this in cases where you would be entitled to a refund and not just a voucher (I believe KLM is one such example) Some hotels are doing the same. I had to cancel a hotel reservation in Ireland booked through hotels.com. I paid in advance but reservation could be canceled. Hotels.com offered a 25% additional value if I took a voucher instead of a cash refund. I strongly considered it but only use hotels.com for some international hotel bookings where I can get better deals and I won't have any international bookings out of my own pocket for a while so I opted for the cash refund in this case.
I'm not necessarily suggesting DL offer a 25% incentive but it did make me wonder why DL isn't offering something similar (perhaps they did consider it and based on their own internal calculations have decided this is not the route to go). I already canceled my DL tickets to Europe for a refund, I was talking to my parents this weekend who also had a trip to Europe later this year that they are canceling for a combination of factors and due to the schedule changes in their flights, would be entitled to a refund. They asked me if they were better off taking a voucher or getting a refund. Without hesitation, I said, "take the refund". Had DL been offering a strong incentive when I canceled my flights, given that I book enough with DL and will continue to do so, I would have possibly taken an option for a voucher with a decent incentive. But with absolutely zero return, there's zero incentive to allow DL to hold on to the cash in the form of a voucher as an interest free loan that eventually expires as well versus getting a refund. If DL offered a reasonable incentive in exchange for taking a voucher, I wonder if more frequent-flyer types who know they will eventually fly (and even some non-frequent flyers) would instead opt for a voucher.
I'm not necessarily suggesting DL offer a 25% incentive but it did make me wonder why DL isn't offering something similar (perhaps they did consider it and based on their own internal calculations have decided this is not the route to go). I already canceled my DL tickets to Europe for a refund, I was talking to my parents this weekend who also had a trip to Europe later this year that they are canceling for a combination of factors and due to the schedule changes in their flights, would be entitled to a refund. They asked me if they were better off taking a voucher or getting a refund. Without hesitation, I said, "take the refund". Had DL been offering a strong incentive when I canceled my flights, given that I book enough with DL and will continue to do so, I would have possibly taken an option for a voucher with a decent incentive. But with absolutely zero return, there's zero incentive to allow DL to hold on to the cash in the form of a voucher as an interest free loan that eventually expires as well versus getting a refund. If DL offered a reasonable incentive in exchange for taking a voucher, I wonder if more frequent-flyer types who know they will eventually fly (and even some non-frequent flyers) would instead opt for a voucher.
#2
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I agree. I've taken 2 refunds and if instead DL had offered a voucher with a meaningful incentive (at least 10%) and with an expiration date in 2022, I would've been happy to take the voucher over a refund.
#3
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Armchair CEO response: Notwithstanding Delta's high cash burn rate ($50M/day, expected to drop to $0 by end of year), they also have/had a $6B on hand at end of Q1, projected $10B liquidity at end of Q2, and the government basically covering payroll through fall. Perhaps DL thinks it can afford the refunds vs taking a 10% hit to income on new sales when travel recovers. Also, DL doesn't make it obvious that flights are refund eligible (cancellation language talks enthusiastically about how your vouchers are good until 2022 or whatever) so I suspect the majority of refund eligible travelers aren't even aware they can ask for a refund.
In short: DL doesn't think it needs to offer an incentive.
In short: DL doesn't think it needs to offer an incentive.
#4
Join Date: Apr 2016
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- they canceled your flights
- rebooked before Oct 31st 2020
- new flights must be before June 15th 2021
Still quite restrictive IMO and people are still complaining about this...
#5
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Armchair CEO response: Notwithstanding Delta's high cash burn rate ($50M/day, expected to drop to $0 by end of year), they also have/had a $6B on hand at end of Q1, projected $10B liquidity at end of Q2, and the government basically covering payroll through fall. Perhaps DL thinks it can afford the refunds vs taking a 10% hit to income on new sales when travel recovers. Also, DL doesn't make it obvious that flights are refund eligible (cancellation language talks enthusiastically about how your vouchers are good until 2022 or whatever) so I suspect the majority of refund eligible travelers aren't even aware they can ask for a refund.
In short: DL doesn't think it needs to offer an incentive.
In short: DL doesn't think it needs to offer an incentive.
#6
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The middle ground could be only offer the 10% if customer asks for the refund (e.g., don’t volunteer the information for someone already willing to take the voucher but use it as an option for someone directly asking for a refund). Similar to a CC company and the yearly song and dance with annual fees and incentives to stay.
#7
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They clearly think they can afford to refund the cash. The hard part is that at best they had a general ~17% profit margin before, and this mechanism gives that all away.
#8
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- the flight must be more expensive than your previous flight (if it's 5%, you'll get 5% extra voucher value, 10% gets 10%, 15% gets 15% and all above get 15% as well), otherwise you will just get your voucher value.
Besides this, AF/KL have been trying to break European EC261 laws/rules by:
-First only offering a voucher (without any extra 15%)
-Then claiming "all flights cancelled as of May 15" are eligible for a refund (everyone else with flights cancelled before that is sh*t out of luck). If you choose a voucher, it will be 15% extra in value
-FINALLY adhered to the rules and provided refunds for anyone whose flight was cancelled.
-THEN proceeded to p*ss people off again by imposing strict limitations on that extra 15% in value (thus making it effectively worthless, causing many to eventually chose for a refund in the end)
#10
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Armchair CEO response: Notwithstanding Delta's high cash burn rate ($50M/day, expected to drop to $0 by end of year), they also have/had a $6B on hand at end of Q1, projected $10B liquidity at end of Q2, and the government basically covering payroll through fall. Perhaps DL thinks it can afford the refunds vs taking a 10% hit to income on new sales when travel recovers. Also, DL doesn't make it obvious that flights are refund eligible (cancellation language talks enthusiastically about how your vouchers are good until 2022 or whatever) so I suspect the majority of refund eligible travelers aren't even aware they can ask for a refund.