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Digital advancements in the payments sector have enabled it to become one of the most exciting and innovative industries. This is especially true when it comes to payments within the airline industry, which has seen a steady influx of new technologies come to the fore in recent years. New trends and industry initiatives such as, alternative payment methods (APMs) , Open Banking and virtual cards have offered airlines the distinct opportunity to maximise revenue, minimise costs , grow profit margins or reduce risks – something considered especially important in today’s competitive market.

Unfortunately, not all airlines have been able to embrace change and succeed amongst competitors. From 2018-2019, more than 20 airlines were either put out of business or were acquired by another brand. Yet despite a turbulent transition for some, many innovative brands – both traditional and emerging – have been able to bounce back to previous levels of prosperity.

Part of this has been driven by the emergence of low fare airlines and new, unbundled pricing structures. At the same time, the rise of e-commerce and mobile booking has multiplied the payment touchpoints across the customer lifecycle. Add to this the fragmentation of the payment industry , the lack of providers specialised on the travel industry, and the SILO- approach most of airline departments have and its little surprise that airlines struggle to create a fast, efficient and effective global payment strategy.


Changing consumer preferences

Today’s challenge for competing airlines is to meet their consumers’ expectations without over-complicating the user experience by offering too many payment options. This unfortunately, is not an easy feature. The rise of ecommerce, proliferation of mobile devices and wide-spread adoption of the internet has shifted the way in which consumers interact with airlines. While consumers previously worked with travel agencies to handle the majority of ticket bookings, an increasing number of airlines today sell directly to consumers.

Further complicating the process is the fact that the payments industry is highly local. James Booth, Vice President of PPRO estimates that there are approximately 4,000 different methods of payment around the world, only 300 of which are globally recognised. While the increasing number of APMs is convenient for consumers, it’s added to the fragmentation of the market.


The next step for the airline industry

In order to streamline processes and create a long-term payments strategy, airlines need to put a focus on the consumer and understand how they want to pay. The best way in doing this is to provide a seamless payment experience and ensure the right payment methods are offered to the right customers at the right time.  When it comes to creating a frictionless payment experience, those in the airline industry must remember that it holds the title for the highest shopping cart abandonment rates of all e-commerce sectors.

According to recent data from SaleCycle, the majority (87%) of people who select a flight will abandon their search before making a payment. And while payment is not the driver of all abandonment, it is important to make the path to purchase as easy as possible for all consumers. Incorporating easy to use payment processes like 1-click payment – which most e-commerce websites already use – is key.

Offering the right payment method up front to customers is imperative, but beyond that, it’s also important to offer the right method in the right situation. According to an Accelya research, 7% of customers who abandon a flight booking do so because their optimal payment option was not available at the time. This of course is no surprise as there are over 300 globally recognised payment methods. The best course of action in this situation is to focus on providing a fully personalised experience to each customer. Similar to how Amazon adjusts to the consumers likes, user profiles and shopping history, airlines need to take a pragmatic approach and offer personalised and region-specific payment methods.

There’s no doubt that the industry is going to continue to evolve. Over the next few years we’ll likely see some airlines fall behind due to their inability to have a single, unified view of payment data. However, the airlines that centre on offering APMs and enhancing the customer experience will evolve and fare well amongst competitors in a fragmented payments environment.




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