Airlines will increase their focus on new distribution channels such as mobile and social media over the next two years, a new study by airline payment processing firm Worldpay shows.
The majority (83%) of carriers believe that improvement and use of new payment technology is a major business priority. They want to align their payment offerings with customer expectations to gain competitive advantage.
Airlines are focusing heavily on mobile as both a distribution channel and a means of payment.
Almost three quarters (71%) say the future of airline payments lies in mobile – 50% see mobile payments as a way to keep up with competitors and 45% see them as a way to increase revenues.
Mobile payments offer external benefits for passengers but also improve internal processes such as data submission and handling.
Airlines aim to extend existing mobile services over the next two years to offer ancillary purchases such as seat upgrades, booking management, onward travel and inflight sales via mobile phones.
Mike Parkinson, airlines vice-president at WorldPay, which conducted research among 68 carriers, said: “Mobile is not without its challenges – carriers cite increased fraud risk, integration with current systems and processes and mobile platform diversity as the biggest concerns.
“But with more than three quarters of the world’s population now having access to a mobile device, airlines can’t afford to ignore this high-growth channel.”
Many carriers already have a presence on social media sites such as Facebook, LinkedIn and Twitter. They will increase usage on these sites and more – for example, 40% plan to be active on Google+ in the next 12 months.
Social media is now also seen as a high potential sales channel, with nearly a third of airlines planning to enable sales via social media in the next 12 months.
Connectivity is a priority for passengers and this is driving carriers to expand the onboard payment methods they offer and increase services such as inflight internet and mobile.
Cards are still the most popular payment method used by passengers to pay for goods and services on board, but alternative payment methods are growing in popularity.
The number of airlines offering onboard mobile payments will increase from 5% to 36% in the next two years, and 18% of airlines plan to accept e-wallets on board by 2016.
The research shows 40% of airlines believe self-service kiosks will be less important in the future.
Just 17% of airlines are investing more in developing kiosk services, while 29% are investing more in mobile services. This is due to challenges such as the cost to implement and maintain kiosks, difficulties integrating with current processes and the inability to read chip and PIN cards.
However, while kiosk investment is set to reduce, many airlines still plan to implement additional services, such as check-in and seat reservations.
Parkinson said: “With new technologies set to replace traditional channels, it’s important for airlines to ensure they’re prepared.
“The benefits are clear, but each new channel brings specific challenges. It’s vital that airlines work with a payment partner that has a wide range of products and expertise to improve payment processes and transaction rates and maximise global reach.”