{"id":260901,"date":"2020-07-08T06:51:46","date_gmt":"2020-07-08T10:51:46","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=260901"},"modified":"2020-07-08T06:52:50","modified_gmt":"2020-07-08T10:52:50","slug":"airlines-should-rethink-their-refusal-to-refund-passengers-during-covid-19","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2020\/07\/08\/airlines-should-rethink-their-refusal-to-refund-passengers-during-covid-19\/","title":{"rendered":"Airlines should rethink their refusal to refund passengers during COVID-19"},"content":{"rendered":"
Airlines are risking alienating customers and permanent reputational damage due to their refusal to issue refunds after cancelling flights mid-coronavirus.
\n(Pixabay)<\/span><\/span><\/figcaption><\/figure>\n

 <\/p>\n

Despite unrelenting pressures from passenger rights advocates, intense media scrutiny and strident demands from passengers, Canadian airlines have remained largely immutable<\/a> in refusing to issue cash refunds for cancelled flights.<\/p>\n

Passengers are offered future travel vouchers and options to convert to loyalty air miles. Airlines\u2019 immediate focus is on financial survival, arguing that returning passengers money for cancelled flights would cause a financial catastophe<\/a>.<\/p>\n

This response is perplexing and unfair to passengers and passenger rights advocates who have mounted a vociferous social media campaign, class-action lawsuits<\/a> and petitions<\/a>. Yet pressure seems futile as passengers continue to struggle to get cash refunds. You need the money to pay your mortgage? Buy food? Sorry, airlines say they need your money to survive<\/a>.<\/p>\n

Unconcerned<\/h2>\n

Why are airlines not responding to customer demands for refunds? They seem largely unconcerned about the long-term implications of their stance and the risk of alienating<\/a> passengers. Surely they care about their reputation and the trust and loyalty of passengers? Isn\u2019t that why they have airline loyalty plans?<\/p>\n

One possible explanation is what\u2019s known as strategic<\/a> or management<\/a> myopia, where companies and their executives appear to forget the long-term implications of their actions.<\/p>\n

This myopia can impede a company\u2019s ability to foresee future challenges because most of their efforts are focused on immediate survival. Businesses may abandon their competitive goals \u2014 like growth, capturing a bigger market share, customer loyalty and trust, retention and repeat purchases, all necessary for long-term profitability \u2014 in favour of immediate survival at any cost.<\/p>\n

Strategic blind spots can cause companies to disregard important information or to disconnect from customers\u2019 needs. A failure to respond to market and consumer shifts can threaten the survival of an otherwise successful company.<\/p>\n

Examples include Polaroid<\/a>, which lost its monopoly on instant photography, and Kodak\u2019s<\/a> failure to consider the changing demands of customers as digital photography took off.<\/p>\n

So what leads to myopia in a successful industry?<\/p>\n

People have no choice<\/h2>\n

The Canadian airline marketplace is generally considered a duopoly<\/a>, with Air Canada and WestJet dominating the marketplace. These two airlines capture much of the market share, leaving consumers with restricted choices.<\/p>\n

But market dominance could lead the airlines to become victims of their own success<\/a> and cause them to ignore important information, or fail to respond appropriately to market and consumer shifts. Few other industries would be allowed to keep customer deposits for services and products they are unable to deliver<\/a>.<\/p>\n

Airlines see the future as an opportunity for continued success. According to the airline industry, they are expecting a doubling of global air travellers over next two decades<\/a>.<\/p>\n

While the COVID-19 crisis is likely to impact this projection, airlines are expecting to recover to pre-pandemic levels in two years<\/a> and to benefit from growth<\/a> in the future.<\/p>\n

Support from powerful players<\/h2>\n

Canadian airlines seem to have backing of the Canadian goverment<\/a> and the national transportation agency<\/a>, which have voiced their support for the airlines\u2019 refusal to refund cancelled flights.<\/p>\n

The federal government<\/a> appears to sympathize with airlines\u2019 significant drop in revenue due to COVID-19 and the need to use customers\u2019 payments to stay afloat.<\/p>\n

The government\u2019s focus on solvency is evident in its intention to provide a bridge credit facility<\/a> to help them survive.<\/p>\n

Airlines, meantime, are mounting corporate citizenship and public relations campaigns to demonstrate how they\u2019re doing their part during the crisis through repatriation<\/a> flights, shipping medical supplies<\/a> and other corporate citizenship activities. They\u2019re also highlighting their safety measures<\/a> and introducing<\/a> meal plans and customer care kits. Passengers, however, are pushing back against social media posts with consistent demands for refunds, which can reduce the impact of these PR efforts.<\/p>\n

 <\/p>\n

\n
\n

Hey there, AC. Do you know you’re one of the only airlines not refunding passengers for flights that YOU cancelled? That’s super awesome.<\/p>\n

A friend trying to get home has had flights cancelled with 10 different airlines. Of those 10, you’re the only one refusing to refund him.<\/p>\n

\u2014 Bryan Johnston (@JohnstonWriter) July 3, 2020<\/a><\/p><\/blockquote>\n<\/div>\n

 <\/p>\n

Passengers facing financial hardships feel they\u2019re being compelled to give interest-free loans<\/a> to help airlines survive the pandemic. While business travellers are likely reimbursed for the cost of flights, individual passengers are out of pocket.<\/p>\n

Canadian airlines are actively resisting refund requests both nationally and internationally<\/a>, despite escalating complaints<\/a>.
\nBut refunding fares for cancelled flights would garner good will. And airlines may soon not have a choice as powerful organizations take up the fight for refunds. The EU Commission, for example, has recently launched legal action<\/a> against 10 countries over the failure of airlines to reimburse customers for cancelled flights.<\/p>\n

Airlines need passenger trust and loyalty<\/h2>\n

Passengers need to know they can give their money over to airlines and trust<\/a> they\u2019ll be safe on board<\/a>. To recover, airlines will also need the passengers\u2019 loyalty. While there is some understanding that passengers will use airlines for unavoidable travel, loyalty will likely be affected.<\/p>\n

Airline loyalty programs not only retain a valuable<\/a> customer base, they can also be used to provide liquidity during a crisis.<\/p>\n

A demonstration of customer care<\/a>, empathy and responsiveness can help build consumer good will, which airlines will need for their post-pandemic recovery.\"The<\/p>\n

Rumina Dhalla<\/a>, Associate Professor, Organizational Studies and Sustainable Commerce, CSR\/Sustainability Coordinator and MBA Graduate Coordinator, University of Guelph<\/a><\/em><\/p>\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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