Yesterday I uploaded part 1 of this two part post. If you are coming to this page directly from a search engine, please read part 1 first, especially as it contains links to the stories on other websites that prompted me to write on this topic.

Today most airlines have a strong preference for refunding money spent on a buying a ticket in the form of a voucher rathar than cash. But any electronic form of voucher must surely be much more efficient than a paper based process. Yesterday I linked to a story on a 10 page paper voucher mailed to a passenger. Today I’m outlining an alternate electronic process. Note that whilst I am referring to refunds below, a similar logic applies to electronic gift vouchers which have been available from Qantas since Q3 2008.

In the not too distant future many airlines will be using electronic miscellaneous document servers fully integrated into the revenue accounting process to eliminate a lot of paper in the back office; but some airlines aren’t waiting for this and have already implemented creative ways of achieving a similar level of efficiency. For example, by using Airline Robotics (disclosure: my product) to automatically process the refund, deduct the original cancellation fee, enter a fake segment, extend the life of the PNR beyond 330 days and then cancel it after 365 days you get an e-Voucher containing the residual stored value that is much more efficient than the old paper based way of doing this.   

By using a fake segment, the airline can then get an SSR frequent traveller linked to this segment and Amadeus is able to retrieve all PNRs for a given frequent flier so the website can then display an exhaustive list of all upcoming flights AND unused vouchers for that particular traveller. This is shown on the Manage My Booking page in the servicing flow of the website. Naturally as the PNR contains the passenger name, the voucher cannot be transferred to another person.

There are a few other advantages of this approach, apart from the obvious benefit that it is already in production today. Firstly, it can be based originally on a domestic one way combinable fare, but then redeemed on a international journey using an itinerary filed fare. This is harder than it sounds, as some other electronic refund or ticket exchanging products are currently unable to do this. Secondly, it is fully integrated into the accounting processes as it is based on the PNR – this is one thing that many companies trying to sell ancillary revenue generating products to airlines underestimate the importance of; if your product requires a change to accounting systems and processes within an airline it will rarely get past first base. Thirdly, and not really an amazing thing for Amadeus but definintely a benefit to the airline – the credit shell can be reused multiple times without having to pay a new PNR creation fee!  

As you can see, innovation is not just about what is easily visisble to any shopper on an airline website. Some of the really interesting innovation is happening in automating back office processes in the airline direct sales channel. Despite the significant cost savings to be had, I’m not holding my breath waiting for trophies like my fortunate colleagues running both the internet booking engine and the custom user interface layer for the websites seem to win all to often. But life could be a lot worse.