Refundable Air Tickets: Are They Worth It?

AllFly says planners should crunch the numbers carefully before purchasing refundable tickets for a group.

It seems like a no-brainer that meeting planners should purchase refundable group tickets, as all refunds will go directly back to the original method of payment, not individual travel. In the event of cancellation, the value of the non-refundable economy class ticket will usually become an electronic credit in the traveler’s profile.

But business travel management companies say that in reality, this is not always a cost-effective policy full flight. “Save money by avoiding refundable tickets to corporate events,” says AllFly’s Kenny Totten. “Non-refundable fares coupled with clear travel policies avoid costly refunds and maximize savings.”

Totten provides an AllFly case study example of how the math can work out a non-refundable fare in your favor. Consider hosting a spring event in Cancun with 100 attendees and an expected cancellation rate of 5%. “On average, five people in this program will cancel,” he said. “The average ticket price is about $475. If five people cancel and those tickets are converted to electronic points, the company’s risk is $2,375.” This would lead planners to consider paying extra to make all tickets refundable . However, in this case, each ticket adds $138, for a total increase of $13,800.

“The most beneficial thing to do,” says Totten, “is to save $13,000 up front. Could you get one or two travelers to get “free” points for future use? Sure, it could happen. But why spend an extra $13,000? How many tickets do you need to save $475?”

Importantly, Totten concluded, there must be clear policy that the value of any e-credits for non-refundable fares must be used for future business travel. “Most trustworthy travel management companies track airfare points for future use,” he says.

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