For the first time since airlines rolled out ancillary fees, global payment processor Visa is distinguishing those fees paid by travelers on a new "ancillary" payment line.
This will include any non-ticket related purchases, such as in-flight meals, WiFi, baggage fees and entertainment.
Surprisingly, this has never happened before as any airline payments were simply recorded as ticketing-related. This meant that any expense data recorded by business travelers would be lumped into that category if the expenses weren't manually altered.
The shift isn't as simple as one would think, as the processor had to work with each airline to create a global standard that would allow the payment processing technology to deliver the correct meta data with the purchase.
In the announcement, Visa points out that these transactions have jumped nearly 400% since 2008, highlighting just how much the airline industry's business model has evolved — and how this standard will help both travelers and air suppliers.
Visa’s new standard will allow airlines to process these transactions so that they are distinctly identified and categorized from ticket purchases. This offers real benefit to both businesses and consumers, as ancillary purchases now account for approximately 50% of all airline transactions.
This change offers great benefit to the airlines themselves, including the reduction of back office costs and improved customer service, with the benefits cascading to business and leisure travelers, too. Businesses will be able to improve corporate travel reporting, with access to more granular data. And, consumers can more easily understand charges on their bill. For example, what previously may have read, “Airline Air 0014567891014” would now read “Airline Air WiFi.”
This shift will also give Visa an even closer estimation of the exact amounts that airlines are making from travelers on the ancillary front. Up to date, there have been mostly estimates without a direct tie to payment data.
While this announcement is limited to Visa, the other major payment processor, MasterCard, will soon also comply with these evolving standards. American Express has been serving related data since February 2013.