airlines have, by necessity, some of the most complex payment ecosystems of
modern merchants and an equally diverse (and thus demanding) customer base to
pandemic has led to unprecedented levels of stress being placed on systems
which, in many cases, were already outdated to begin with, highlighting the
need for innovation and automation throughout the payments process.
understandably concerned with security
the airline sector is justifiably risk averse when it comes to every aspect of
its business. External threats to security, technology malfunctions and simple
human error can, in the worst-case scenario, lead to loss of life, leading most
airlines to favor tried and tested systems in place of new initiatives.
a commercial perspective, airlines on the whole have high overheads, and
operate at such low margins, that making any changes to their existing systems
could significantly damage – or improve – their bottom line.
nature of change leads to a reluctance to embrace new technologies, which is perfectly
epitomized by the flagship model, the Boeing 737, which, despite taking its
first flight over 50 years ago, is still widely used throughout the industry
today, even though there are far more efficient models available on the market.
This culture of
risk aversion extends to airlines’ payment ecosystems, with many carriers
preferring to persevere with traditional and cumbersome payment solutions, or
sub-optimal partnerships with a single PSP, rather than embracing the benefits
of new, emergent platforms and solutions.
payment eco-system in a complex market
international airlines serve customers from all over the world, operating in
multiple different currencies and jurisdictions. This leads to many nuanced
challenges in allowing customers to pay how they want. Different cultures
prefer different methods, with some regions preferring digital options over
physical cash, for example.
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can also create friction during the shopping and payment experience, leading to
failed conversions. Additionally, consumers have many different profiles, from
business travelers to families on long-haul leisure breaks, each with their own
unique payment needs.
As a result,
airlines need to offer a wide variety of payment methods around the world,
managing a high volume of cross border transactions and offering multiple
different currencies to match their consumers’ needs.
however, isn’t just on the customer’s side. Managing a payments ecosystem that
can successfully meet the needs of an international customer base means
building relationships with several different acquirers and payment service providers in every
territory the airline serves, giving them multiple options to mitigate risk and
optimize their costs and acceptance rates.
cumbersome process of establishing and integrating new acquirers, payment
method providers or PSPs, airlines often encounter difficulties in rolling out
the right payment eco-system they need for their network, or scaling platforms
to support a new destination. This leads to friction for customers looking to
buy, change or refund their tickets.
COVID-19 - a
catalyst for digital adoption & automation
for airlines and their consumers have been brought to bear during the COVID-19
pandemic, which has placed unprecedented stress on airlines’ traditional
As consumers on a
global scale tried to refund tickets in the event of mass flight cancellations,
airlines had to be on hand with alternative options to keep capital in house,
largely by offering rescheduled dates and issuing vouchers wherever possible.
At a time when
refund requests hit their peak, the need for and benefits of automated
solutions to offer and issue refund vouchers as an alternative became
cancellations also led to a near overwhelming amount of chargeback requests
which, again, many airlines didn’t have the technology in place to manage
efficiently. Carriers that didn’t have the capability to automate the
management of unjustified disputes had to either incur sizable costs to
increase their back-end resources to handle the volume, or simply write revenue
off altogether, leading to significant negative financial impact in both
shift towards digital and contactless payment methods was also accelerated
during the pandemic, with customers increasingly demanding socially distanced,
COVID-secure payment methods, and airlines who readily embraced this change saw
One example of
this is Cellpoint Digital client, Southwest Airlines, which incorporated Apple
Pay into its payment mix in late 2019. The platform has since become the
airline’s most popular alternative payment method in the wake of the pandemic
and continues to grow month-on-month.
What the pandemic
highlighted overall was the rigidity and lack of automation of most airlines’
current payment solutions, and the need for more agile payment orchestration
solutions to better serve their customers and optimize their payment ecosystems
on a global scale.
A new dawn for
the airline sector?
For an industry
that was already averse to risk, and faced challenges in innovation and
technological development, COVID has spearheaded digital adoption and exposed
the need for more efficient payment systems.
The changes brought
about by the pandemic will be felt for years to come, and airlines will need to
adapt to survive. Like airlines, the merchants who embrace the widespread shift
to new technologies such as payment orchestration and invest in allowing their
customers to pay how they want, will see the greatest benefits in the
About the author...
Stephane Druet is senior vice president of product and marketing at CellPoint Digital.