A new study by Amadeus consisting of 5,000 travellers showed that 63% of Malaysian travellers are more likely to book from an airline that uses the Pay When You Fly (PWYF) option. They are also 49% more likely to use a ‘Buy now, pay later’ option. These were brought up because Malaysian travellers are concerned about how the current pandemic is affecting their travel plans.
68% of Malaysian travellers said that the increased risk of cancellations due to the pandemic is a barrier to booking travel this year. 51% of them said that refund uncertainty is an issue, while around 48% of them said that the inconvinience of booking and refunds is a concern. In fact, this is a problem for the airlines too, as illustrated by AirAsia having difficulty paying back outstanding refunds.
What is ‘Pay When You Fly’?
PWYF is an option led by a major European carrier that sees the traveller pay a deposit of around 15%, and then settling the balance a few weeks before departure. This minimizes the risk of cancellation, which is a big concern for Malaysian travellers.With this method, the traveller does not need to enter a credit agreement and is not liable to pay the entire balance. If there is a cancellation, the airline would not be burdened with a large amount of refunds, since most of the funds remain with the traveller until before departure.
‘Buy now, pay later’ is a similar option that has been largely adopted, but requires the traveller to enter a credit agreement. The benefit of this option is that the payment can be made in installments, which allows the cost to be spread over a long period of time.
“Malaysia is currently undergoing the third COVID-19 wave, putting a halt on all travel arrangements be it local or international. Nonetheless, Malaysians are hopeful (42%) that travel could get better within the next 12 months.” Klein Wang, Regional Head of Merchant Solutions, Asia Pacific, Amadeus commented.
She then continues, “In rebuilding traveler confidence, Amadeus believes that flexible payment options like PWYF can mitigate the pain points of customers who want to plan travel but are wary of cancellation policies.”
Amadeus stated that under PWYF, refund uncertainty is reduced, Malaysian travellers will be willing to spend 61% more per trip on average, and 56% of them will be more likely to add additional services like meals and bags.
On a whole, PWYF is similar to Agoda’s ‘Book Now, Pay Later’ option or Lazada’s ‘Chup Dulu’ sale. Both allow the customer to pay a small deposit to book a service or product, while paying the rest of the balance later on.
In Australia, AirAsia has partnered with Zip, an Australian company that implements the ‘Buy now, pay later’ option. There has been no plans for any Malaysian airlines to implement this so far, but the demand is there, so hopefully it will be an option soon.
Amadeus offers a wide range of solutions for airlines including ticket reservation and customer experience management. Some of their customers include Lufthansa, Cathay Pacific, Singapore Airlines, British Airways, AirAsia and Malaysia Airlines.