Increase airline revenue by highlighting refund policies to address customer concerns around COVID-19

Ukraine International Airlines (UIA) is the largest Ukrainian flag carrier with more than 1 million monthly website users prior to COVID-19 (according to SimilarWeb). UIA operates more than 1,000 regular weekly international flights to Europe, North America, Asia and Africa. It also offers several domestic flights throughout Ukraine.

Summary

The airline industry has experienced an unprecedented drop in passenger traffic as a result of the global outbreak of COVID-19. Users are less likely to purchase airline tickets during the pandemic due to travel bans and sudden flight cancellations.

Our challenge was to find a solution that would increase the conversion rate to ticket purchases during COVID-19. The goal was achieved by addressing key user objections in the flight booking process. The KPIs were the session-to-purchase conversion rate (CR) and the average revenue per user (ARPU) of the UIA website.

We conducted qualitative and quantitative research to identify hypotheses with the highest growth potential. As a result of our research, we discovered that the number one user objection to booking an airline ticket was the uncertainty that the flight would run as scheduled and not be canceled due to newly imposed travel restrictions. To mitigate this objection, we added a banner to the ticket booking page informing users of a 125% money-back guarantee as a bonus that could be spent on the next flight in the event of flight cancellations due to COVID-19.

As a result of our improvements, we were able to increase the conversion rate (CR) by 23.57% and increase the average revenue per user (ARPU) by 28.30%.

Research

Our extensive funnel performance analysis revealed that there were a number of stages in the booking flow with significant traffic drop-offs. We decided to focus on the flight search results page as the page with the greatest uplift opportunity.

We then wanted to understand why users were abandoning the ticket booking flow without completing a purchase. We ran a survey on the ticket booking page to learn more about what was preventing users from buying tickets. 41% of our online survey respondents said they were less likely to purchase airline tickets due to the uncertainty caused by the coronavirus outbreak. Specifically, 37% of these 41% of COVID respondents (15.2%) cited the fear of losing money if the flight is canceled or the lack of clarity of the refund policy as the main barrier to purchase.

We needed to find a solution that would address users’ concerns and convince them to complete their booking.

Solution

Ukraine International Airlines had a special refund policy that offered customers 125% of their ticket price as a voucher to use on future flights if a flight was canceled due to COVID-19. However, this information was not clearly visible on the website. So the question was whether making the refund policy more visible on the website would result in additional revenue.

Our survey data showed that 41% of users were hesitant to purchase airline tickets due to uncertainty about COVID-19, and 37% of those users specifically cited fear of losing money or the lack of a clear refund policy.

Our solution was to overcome these two main objections by adding an informational banner to the ticket booking page that communicated the following message

“UIA will credit the full ticket price +25% if the flight is canceled due to COVID-19.

The credit will be in the form of a promo code that can be used to pay for a trip within 2 years”.

To save space, the banner was folded on mobile and could be unfolded by clicking on it.

To validate our hypothesis, we ran an A/B test on the ticket search results page on mobile, with traffic split evenly between the control version of the page and our alternative version.

We targeted all users arriving at the ticket booking page, regardless of their geolocation. The required sample size for 91% statistical power was achieved in 18 days of A/B testing.

To ensure flawless functionality and display of the alternative variation, we set up video session recording through Hotjar, event tracking of banner interactions (clicks, banner expand and collapse). This allowed us to measure user engagement with the banner and understand if it was useful information at that stage.

See the control and alternative ticket booking pages below:

Control variation

Alternative variation

Results

The alternative variation outperformed the control variation, generating a 17.2% increase in microconversion from the home page to the search results page and an 11.2% increase in ARPU. The result of the experiment achieved 95% statistical significance.

Key Takeaways

Fear of cancellation and ambiguity around return policies is paralyzing the ticketing industry.
Identifying the dominant user concerns at each stage of the funnel and then addressing each independently will positively impact user progression from one stage to the next and have an overall positive effect on macro conversion.
To strengthen the validity of A/B test results, measure the impact of improvement not only on macro conversion, but also on funnel performance and user engagement.