SINGAPORE, 6 June 2024: Disjointed approaches to payments result in operational inefficiencies and lost revenues for airlines, according to a study released today by CellPoint Digital, a leader in digital payment solutions for the airline industry.
The report, Payments Come of Age: A Global Study of Airlines and Their Payment Technology Needs and Challenges, offers a first-of-its-kind analysis of airlines’ payment challenges, their approaches to payment optimisation, and the technology that can help them achieve it.
Overcoming Limited Payment Options
Based on a survey of 151 airline professionals worldwide, the research pinpoints specific challenges, including the limited availability of alternative payment methods (APMs) and regional payment options. Only 11% of surveyed airlines report being able to accept newer APMs like open banking and account-to-account payments. This limits their ability to expand and meet the payment expectations of travellers in crucial markets like Southeast Asia, where APMs are increasingly used for travel purchases.
The report also reveals that airline professionals believe they need to improve prominent areas of the passenger experience, like boarding (44%), customer support (40%), and check-in (39%), to remain competitive in this challenging environment. Crew scheduling (28%) and in-flight operations (27%) were other areas cited as requiring improvement.
‘Payments Come of Age’ analyses airlines’ payment-specific challenges and how professionals in different airline departments perceive those challenges. Revenue managers are more concerned than other airline professionals about a lack of flexible payment options (25% vs 21% survey average) and the inability to transact in passengers’ preferred currency (25% vs 23%). By validating the concerns of their internal payment experts and adopting comprehensive payment strategies such as Payment Orchestration, airlines can leverage optimised, streamlined payment processes to reduce costs, increase revenue, expand to new markets and improve the passenger experience.
CellPoint Digital CEO Kristian Gjerding comments: “Payment efficiency is as crucial as expanding route networks regarding airlines’ financial health. The evolution of payment processes towards Payment Orchestration proves that payments have come of age, unlocking profitability for airlines prepared to invest in innovation. By prioritising forward-looking payment strategies, airlines can deliver seamless booking and travel experiences for passengers, driving booking volume.”
Payment Challenges are Pervasive
The Payments Come of Age report also explores region-specific airline payment dynamics. For example, as LatAm emerges as a critical market for many global carriers, transaction success and payment efficiency are necessary for airlines to capitalise on the region’s potential.
As such, airlines serving Latin America are investing in instalment payment capabilities at a greater rate (35%) in 2025 than their European and Asian counterparts, responding to the demand for ‘Buy Now, Pay Later’ features in the LatAm market. Across the LatAm market, existing airline PSPs often lack local reach and comprehensive alternative payment method (APM) support, leading to lower transaction acceptance and revenue loss. Airlines can overcome this by investing in comprehensive payment strategies and offering their finance professionals a seat at the table.
Profit Protection
Airline margins remain vulnerable even as carriers post record total profits. IATA predicts that net profit margin industry-wide will be 2.7% in 2024, a slim 0.1% increase over 2023, despite projected revenue growth of 7.6%. Increasing operational efficiency is the only way for airlines to drive bottom-line growth. Payments represent a significant opportunity– the industry spends over USD20 billion on payment costs, or about 3% of airlines’ total revenue and 78% of the industry’s net profit. Efficient payment processes, including Payment Orchestration, can help airlines boost conversions in direct and indirect sales channels at lower transaction costs, directly impacting profitability.
About CellPoint Digital
CellPoint Digital is a fintech leader whose main solution is a Payment Orchestration Platform that optimises digital payment transactions from cards or alternative payment methods. CellPoint Digital has offices in Copenhagen, Dallas, Dubai, London, Miami, Pune, and Singapore. Visit www.cellpointdigital.com to learn more.
Here’s the report: Report copy: Payments Come of Age
(SOURCE CellPoint Digital)
