3 success factors behind airlines and their mobile payments strategies
As airline passengers increasingly turn to smartphones and other mobile devices to book and manage their flights and related travel arrangements, airlines have the opportunity for significant new revenues. Like other industries, however, carriers are leaving too much of this revenue potential on the table.
While airlines haven't entirely overlooked mobile technology, not all carriers are able to capture robust information about mobile's impact on their business and, in some cases, they have not overcome technical limitations on the use of mobile payments.
So questions remain: How many airlines, for example, currently are viewing the mobile channel as a key revenue generator? And how does adding mobile payment capabilities impact an airline’s revenues and profitability?
Looking at mobile payments in this light reveals new areas of opportunity as airlines gain experience and know-how in handling the types of mobile transactions that passengers increasingly expect as part of a satisfying travel experience – and that are already the norm across other sectors.
Three factors are key operational focal points for airlines -- passengers, payments and profitability. Passengers, payments and their combined power to boost profitability are keystones to revenue growth and stronger bottom lines.
1. Passengers: Demanding and Increasingly Mobile
Travelers expect to book, buy and upgrade directly from the mobile environment.
- 84 percent of travelers want real-time access to information as they travel, and 60% never fully "unplug," even on vacation.
- Nearly 20 percent of passengers now book flights on mobile devices.
- Nearly 70 percent of travelers use smartphones when planning a trip.
Airlines and travel companies must embed 24/7 communications, transactions and payments into their passengers' mobile devices to gain revenues while nurturing brand loyalty.
2. Payments: Transitioning and Filled with Potential
More than 300 different payment methods are already in use across the globe some across borders, while others are specific to countries or regions.
According to Juniper Research, 20 percent of the world's $12 trillion (USD) in retail transactions by 2021 will take place on mobile devices.
Payment innovators are rolling out new mobile payment solutions, with new countries and capabilities added seemingly each week.
Airlines’ growth strategies must include operational integration and deployment of these new mobile payment methods if airlines hope to capture revenues from a payments ecosystem that is transitioning from credit/debit payments and cash to the mobile environment. Such a strategy might include partnering with Google, Apple or other companies at the front edge of technological innovation.
3. Profitability: Awaiting Integration with the Mobile Channel
Since the 2008 financial crisis, airlines have made significant progress tackling a variety of legacy issues that include load factors, fleet expansion and aircraft upgrades, labor costs, and other operational concerns.
2017 profit pressures will come from rising fuel costs and increased competition.
In this environment, airlines -- like other industries -- must more effectively deploy new payment technologies and accurately measure their revenue impact across a number of potential revenue streams from such sources as ancillary products and services, direct-channel sales, and loyalty programs.
Clearly, the industry is at a crossroads defined by high expectations for financial success and a mobile marketplace that is undergoing profound, rapid and global change. By acknowledging the impact and potential of these "Three Ps" -- passengers, payments and profitability -- airlines will be in a better position to meet the expectations of their passengers and to reach their goals for continued growth and financial success.
Kristian Gjerding Kristian Gjerding CEO of CellPoint Mobile, a payment solutions provider for airlines. Gjerding has helped shape the digital payments environment through his work with best-practice standards groups at airline organizations globally.