Successful test for new way to pay for airline travel

January 11, 2019
Payment airline website
Emirates was one of the airlines involved in the test. Photo: Emirates.

A new payment system that allows passengers to securely buy tickets on airline websites using money transferred directly from their bank account has successfully undergone its first live test.

The International Air Transport Association tested the new  IATAPay system with UK-based financial technology company ipagoo as well as members Cathay Pacific Airways, Emirates and Scandinavian Airlines.

The direct-debit option would be made available alongside other methods of paying for airfares such as credit card, PayPal and Bpay.

The airline group is working with Deutsche Bank on a prototype for Europe, excluding the UK, which is expected to undergo testing in early 2019.

It will start with the German market but the intention is to introduce it in other regions.

IATA says the process offers a high level of security for both users and recipients and can be instantaneous.

It helps airlines because it will be cheaper and faster for them than alternatives and a simpler payment process is expected to result in fewer lost sales.

There are similar benefits for consumers.

“Today’s consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer. IATA Pay responds to these expectations,’’ said IATA senior vice president of financial and distribution services Aleksander Popovich.

“At the same time, airlines are trying to manage significant card payment costs — $8 billion per year and rising.  A large part of this cost is incurred in direct purchases from airline websites.”

Separately, the airline association reported passenger traffic growth in November moderated but remained healthy.

READ IATA warns on global trade after November cargo flatlines.

Global traffic rose 6.2 percent compared to November 2017, a slight deceleration from the 6.3 percent growth in October, but failed to keep pace with a 6.8 percent growth in capacity.

This saw the load factor dip 0.4 percentage point to 80.0 percent, only the third time this had happened in two years on a year-to-year basis.

“Traffic is solid. But there are clear signs that growth is moderating in line with the slowing global economy,’’ said IATA director general Alexandre de Juniac.

“’We still expect 6 percent demand growth this year. But trade tensions, protective tariffs and Brexit are all uncertainties that overhang the industry.’’