Turning airline payment challenges into opportunities

Turning Airline Payment Challenges into Opportunities

Payments are an integral aspect of many of the operational challenges airlines face, such as expanding route networks and growing ancillary revenues. By optimising payments, airlines can reap significant rewards, which often accrue directly to their bottom lines. At the same time, disjointed approaches to payments and outdated systems and strategies constrict margins and inhibit growth.

These are some of the key findings from our first-of-its-kind report on the airline payment landscape; Payments Come of Age: A global study of airlines and their payment technology needs and challenges, available for download on May 29th. The unique report, based on a survey of 151 airline professionals from across the globe, paints a comprehensive picture of how airlines can adopt innovative payment strategies to drive more revenue and improve their passengers’ experience across markets.

How can payments impact different aspects of airline operations, from distribution to reconciliation to passenger satisfaction?

Airline Payment Ecosystems as a Driver of Growth

Our report explores the role of forward-looking payment strategies, including Payment Orchestration, in making airline operations more efficient, paving the way towards cost savings and increased profitability. It also addresses the challenges airlines commonly face, including payment challenges like the availability of alternative payment methods (APMs), reconciliation and reporting issues, and struggles with dynamic currency conversion.

For example, 38% of surveyed airline professionals cite complex reconciliation processes as their foremost challenge, on par with route network expansion, whereas airline revenue managers are more concerned by a lack of flexible payment options than the survey average (25% vs 21%).

The airline industry association, IATA, predicts that net profit margin industry-wide will be 2.7% in 2024, a slim 0.1% increase over 2023, despite a projected revenue growth of 7.6%. This means that increasing operational efficiency is the only viable way for airlines to drive bottom-line growth. Optimising payments is an opportunity for airlines to increase their margins – the industry currently spends over $20 billion on payment costs, or about 3% of airlines' total revenue and 78% of the industry's net profit.

Payment Orchestration allows airlines to identify areas for improvement and more efficient back-office operations. More efficient payment processes can help airlines reduce costs, with those reductions flowing directly to their bottom lines.

Payments are a Critical Part of Airlines’ Business Model

Our analysis of airlines' payment strategies and challenges - the first survey-based payment report for the airline industry, demonstrates that payments have an inescapable, integral and growing role in airline operations. The right payment approach, supported by investment in technological solutions, will enable airlines to pursue more effective expansion strategies and maintain and increase their profitability.

Learn more about the potential of streamlined payment processes in Payments Come of Age.