For many travel companies, their instinctive reaction during the COVID-19 travel shut-down will be to prioritise customer refunds in order to win their loyalty. In a sector that's highly competitive, and where customers need to be re-won every time they book, travel firms have a lot more to lose in the current situation if they do not implement a carefully thought through customer refund policy.
With revenue for most travel companies effectively down to zero, protecting liquidity is critical. While it is tempting to treat customers' needs at this time above all others by issuing refunds, and protecting liquidity by withholding payments from suppliers, there are significant risks to both the company's and its supply chain's survival. Allowing key, unique suppliers to fail will impact a company's ability to offer the products their customers love once this crisis passes. This time around, travel companies need to carefully balance the needs of many more stakeholders than just the customer. After all, there is no point winning customer loyalty today, if there's no company around for them to travel with tomorrow.