Thought Leadership

Leveraging Compensation Payments to Improve Airline Experience

TL;DRAirline operators worldwide have the unique opportunity to leverage compensation payments to improve the experience of travelers and further digitize their operations. Replacing legacy paper vouchers with an on-demand digital compensation system will not only help airline carriers increase their bottom line, but also give them the tools they need to comply with new and evolving global passenger protections and regulations.

For many years, airlines have focused their energy and resources on improving the travelers’ booking experience by increasing check-in speeds and efficiency, streamlining on-board customer service, and maximizing cabin design, to name a few focus areas. And while providing passengers with a seamless journey and in-flight experience has been the primary focus for airlines, both regulators and passengers alike have become increasingly concerned about traveler protections, especially in circumstances where a flight has been canceled or delayed, and when baggage has been lost or misplaced. With increasing passenger protection regulations now in effect, and the rise of mobile technology, airlines are under increased pressure to improve how they compensate travelers for irregular operations (IROP), and are now looking for ways to retire the old, inefficient voucher systems in favor of new, digital payout processes.

Digitizing Claims and Providing Payment Options

The paper voucher system is a manual compensation process whereby vouchers must be approved, printed, and distributed, often to a large number of passengers. The process is extremely manual, time consuming,  and prone to errors. And yet, it remains the preferred compensation vehicles for many major airlines carriers. Eliminating this archaic voucher system and adopting digital compensation technology is, not surprisingly one of the easiest ways to improve customer experience and enhance brand loyalty.

Passengers who have experienced the voucher system recognize its many limitations, not to mention the frustration of having to wait for assistance from either an airline desk agent or call center representative. Keeping track of a physical voucher itself can be another challenge for digital-first travelers. For airlines, this translates into a tumultuous customer experience, one that’s often magnified and broadcast to hundreds of thousands of people via social media platforms.

While paper vouchers are difficult to track and manage, digital compensation systems allow for fast and easy processing and reconciliation, while reducing payment redemption time and associated administrative expenses. With Hyperwallet, airlines can give travelers control and flexibility over how and in which currency they wish to receive their compensations for flight delays, interruptions, or baggage issues. With 9 available payout methods, including PayPal, eGift Cards, and local bank transfers, Hyperwallet’s technology makes it easy for airlines to accommodate the unique needs and payment preferences of travelers around the world.

Evolving Technology in the Airline Industry

The use of airline mobile apps is on the rise as more airlines worldwide are offering them. Not surprisingly, travelers prefer to receive notifications and perform flight check-ins via their smartphones. But that’s just the tip of the iceberg. Travelers are also pressuring airlines to improve their disruption management due to IROP and lost baggage claims. This means that, in addition to providing passengers with real-time travel information and automatic flight re-booking, carriers need to build airline compensation systems that aren’t just compliant with new regulations, but that ultimately put the needs of their travelers first.

Since passengers are looking to technology to improve their travel experience, airlines should now think about using technology during less than ideal travel circumstances. Providing fast, digital compensation payments for flight disruptions, cancellations, and/or damaged or lost baggage could make a real difference in overall passenger satisfaction. Airlines have a real opportunity to boost their customer satisfaction ratings (Net Promoter Score, J.D. Power, or Skytrax) by offering passengers on-the-go mobile compensation payments, all while keeping any associated administrative and IT cost down, and complying with government regulations.

Dealing with Global Passenger Protection Regulations

The airline industry is facing increasing government regulations, especially with respect to passenger protections. In Europe for example, the EU261 rules require airlines to notify passengers of their rights for compensation and assistance in the event of denied boarding, flight cancellation, or delay.

Canada’s new passenger bill of rights provides similar protection rules and requires airlines to refund passengers or rebook them with another airline when flights are delayed or canceled. In the US, airlines are not required to provide minimum compensation for flight cancellations or delays, however many carriers have established specific compensation guidelines in the case of overbooking situations. In Australia, passenger compensations for delayed or canceled flights are left to the discretion of each airline operator. India has also introduced a new passenger charter that allows travelers to claim compensations for flights canceled within 2 weeks of departure date or for overbooking if the airline fails to arrange for an alternate flight.

As you can see from the above mix of regulations and rules, airline carriers have a lot to take into consideration when it comes to maintaining compensation compliance across multiple geographies and jurisdictions. Managing all of these requirements in-house isn’t easy. Airlines are required to provide prompt compensation payments under ever changing regulations including notifying government and civil aviation authorities of those occurrences. Hyperwallet can help make the payment requirement seamless.

Delighting Travelers Even in Difficult Situations

You don’t have to be a frequent flyer to know that airline disruptions happen. As an international airline carrier, you can abide by global air passenger protection and improve the experience of your travelers during these unexpected situations. Airlines have the responsibility to both abide by global air passenger protections, and ensure the best possible traveler experience during these unexpected situations. Ready to modernize your compensation payout process? Download our compensation payout guide for airlines to learn how Hyperwallet can help.


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