According to research by global aviation analytics firm Cirium, a projected 47% growth in global airline capacity will see a return to 2015 levels by the end of this year. But the pandemic-driven switch to digital channels means expectations are higher than ever when it comes to paying for flights.
Airline payments systems have endured intense scrutiny over the last two years - their weaknesses highlighted when droves of customers demanded refunds after travel restrictions were imposed.
It became apparent that, while the process of taking payments from consumers and delivering them to airline bank accounts was effective, the process for refunds was never designed to be more than a small-scale system. In other words, it was never intended to be fully capable of sending the flow of money in reverse.
Processing payments in the new normal
For so many industries, the pandemic has been a catalyst for change, and airlines should see this period as an opportunity to adapt payment processes to meet new customer demands and avoid another refunds disaster.
To better understand where airline payment managers are right now in terms of their systems, CellPoint Digital commissioned exclusive research to get the views of airline payments managers in carriers across the globe, of all sizes and business models.
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The research reveals widespread recognition of the need to improve payment systems and, in turn, the customer payment journey. The majority of respondents (66%) want to focus on improving the airline customer payment experience, and when asked about pain points in their processes, many highlighted consistency across channels and less friction at checkout.
Airlines should look to companies such as Amazon and Uber, which have made it extremely easy to pay with a single click, and consider the adoption of more alternative methods of payment (APM). Our research revealed that most respondents currently use fewer than five APMs.
More ways to pay
Research has highlighted that 84% of travelers now pay with non-cash methods such as contactless or mobile payments. The convenience of mobile devices, e-wallet options, contactless payments, QR codes and new approaches to authentication have transformed the way we pay for goods, and airline tickets need not be an exception.
For example, offering the option to combine air miles, cash and vouchers to book a single trip would give travelers what they want, and with a simple "slider" function, airlines can make it easy for travelers to use these different types of funds for a single booking. Airlines that fail to adopt this type of functionality or offer a wide range of APMs risk creating friction points that will drive customers elsewhere.
Digital payment innovation can also help automate the disruption management process when things don’t go to plan.
Digital payment innovation can also help automate the disruption management process when things don’t go to plan. For example, if a flight is cancelled the traveller can be issued a digital voucher directly to their e-wallet.
The support processes that sit behind the payment experience are also in need of improvement. For instance, only one in five of respondents have an automated chargeback dispute process in place, despite the increase in chargebacks during the pandemic. Recent developments in payments orchestration provide an incredibly useful platform on which to build and develop these from, but are only used by two-thirds of survey respondents.
These platforms provide a single interface through which all transactions among the airline, its customers and its payment providers are initiated, directed and validated. Not only does this remove the complexity of monitoring the performance of multiple, manually integrated payment methods, but it also gives the airline greater control over transaction flows.
This is because when airlines are reliant on a single acquirer/PSP it is they who have ultimate control over transaction flows. A payment orchestration provider redresses this imbalance by transferring control of the transaction flow. This dynamic routing improves the success of processing rates and gives customers more payment options and means failed transactions can be re-routed to the next acquirer leading to fewer lost sales.
Payment orchestration enabled APMs can give airlines the ability to give consumers whatever payment method they want, wherever they are, but of course require investment.
Making payments a priority
The good news is that payments are now being seen as an area of strategic investment, with bigger injections of cash expected. Our research found 40% of respondents are expecting an increased budget, with almost one in five saying it will increase by more than 20%.
So, while COVID-related refunds brought airline payments managers and their processes to the forefront of the media and their customers, it has also caught the attention of airline C-suites and prompted them to take action. Many C-level executives have now woken up to the positive role payments can play in their business and are willing to invest and consider it more of a strategic priority than they did pre-COVID.
By considering the customer journey from beginning to end, payments can become a strategic differentiator, supporting a better experience for travelers and overcoming pain points such as complexity, stress, fragmentation and a lack of choice when paying.
Our study is evidence that airline payments managers and C-suites have had their eyes opened to the fact that frictionless payments both enable a more convenient experience for the traveller and are essential to the industry’s overarching strategy. On this basis, a better external airline payments experience is coming to many passengers around the world.