Germany Pushes For ‘Pay As You Fly’ Model

Lower Saxony, located in the north-west of Germany, has called for eliminating upfront payment for air tickets after thousands of cancellations this summer.

Bernd Althusmann, the state’s minister of transportation, has reiterated proposals to implement a “pay as you fly” (PAYF) model when airline tickets are paid for only when the passenger checks in.

According to a report in the German business journal Handelsblatt, the Federal Ministry for the Environment and Consumer Protection has accepted the suggestion. It may be discussed at the next meeting of the Federal Council on 16 September.

Althusmann told Handelsblatt, “the implementation of our plan would only result in minimal additional expenses for the airlines, but on the other hand, travellers would be saved a lot of headaches.” This was about passengers’ significant delays while attempting to receive refunds.

It was also applauded by the German Business Travel Association (VDR), which has been pushing for a PAYF model since 2021.

“Advance payment for air travel is an obsolete system that should be replaced by prompt electronic payment,” said Christoph Carnier, president of the VDR.

The accompanying bureaucracy of cancelling bookings and distributing refunds would be over, and the move “would not only conform to real consumer interests,” he continued.

According to BTN Europe, a PAYF model offers several benefits to corporate travel managers, including eliminating the need to seek refunds or hire a TMC to manage this process and decreasing the likelihood of financial loss due to airline insolvencies.

Lufthansa introduced a “Pay as you fly” programme for European business clients in March 2021. This programme has somewhat different booking policies and higher costs.

However, VDR suggests that other airlines follow Lufthansa’s lead and initially provide passengers with an extra PAYF option, enabling providers to gather expertise before a wider rollout.

To make the “pay as you check-in” option the norm, “the booking systems would have to be configured and supplemented properly,” Carnier added.

Additionally, he cautioned that “care must be taken” to guarantee that a PAYF model can be adopted internationally.

He added, “Going it alone in Germany may be a significant move, but it should be thoroughly thought out, taking into account all the consequences, in order to rule out any negative outcomes.”

The following should apply to all travellers: “At the time of booking, you are entering into a contract of carriage subject to certain terms, including but not limited to no-show and/or rebooking fees.”