A customer-focused roadmap to digital airline payments

A customer-focused roadmap to digital airline payments

This is our last article before the World Aviation Festival in Amsterdam in a couple of weeks. We will end the series of articles with a reflection on airline payments, like a shopping experience usually ends with a payment transaction. Bref.

Should airline payments come as an after-thought of a retailing strategy, as a cost of doing business? What is the strategic dimension of payment for travel suppliers? As payment costs have grown bigger now than distribution costs for airlines, is there any new capability that could both enhance the customer experience and reduce costs?

The airline payment topic is closely related to the customer confidence topic and to the retailing topic which we discussed earlier. We also highlighted payments in our White Paper in proposal #6 (vouchers & e-money) and in proposal #16 (customer accounts). So what will digital airline payments look like?


A world of credit cards

Credit cards are still the ubiquitous method of payments for travel purchases, both in the leisure and corporate worlds. Notable exceptions, such as payment apps like WeChatPay and AliPay in China, or e-wallets like PayPal in the US or Lydia in France, show what the future of digital will look like.

The concept of linking a bank account to a 16-digit number was revolutionary when it was invented about a century ago… by airlines. Credit cards have improved a lot, for example in the physical card experience with the contactless payment, which became the norm during the pandemic. Mobile wallets, like Apple Pay, add an authentication layer on top of the card and enable contactless payment… without entering a PIN.

In the online world, paying with a credit card stored on a website is relatively seamless (as long as the real-time check on the card mobile app works smoothly). The issue remains when dealing with a new website, entering all the card payment details. The entire payment process, including the authorization, may still result in poor conversation rates.

If credit cards still work well, why change? It is a mix of convenience for customers and cost reduction for merchants (estimated at $20.3bn or 2% of the $1trn sales by McKinsey), with an evolution of technology.


The combined effects of Uber, Fintech and the pandemic

In the past few years, the perception of airline payments evolved from tactical considerations (credit cards work well, why bother?) to strategic thinking (payment options are a key differentiating factor for a travel business).

The Uber “seamless payment” experience, whereby the customer does not need to worry about paying a cab driver, was a catalyst in the change of perception. It became even more relevant and obvious for e-scooters, because users would not enter their credit card details for each ride, as there is no card reader on the e-scooter.

The Hopper “peace of mind” proposal, where customers don’t need worry about finding the cheapest fare or making changes to their bookings, extended the payment discussion to financial services. Indeed airlines imposed those constraints (non modifiable tickets, non refundable tickets, 10x price variation on one route…) with their revenue management practices, and it took the likes of Hopper’s fintech to compensate for the constraints and restore the confidence.

The Covid pandemic added uncertainty to travel planning and to health, with the effect of boosting travel insurance for changes and health. Insurances and other financial services have complemented the simple payment transaction, which would otherwise be definitive and risky from a customer perspective.


A customer-focused roadmap

The last decade has seen consumers opting for a variety of forms of payment (FOP) beyond credit cards. Airlines have faced at least three options: 1) adopt as many FOP as possible 2) steer customers to use cheaper FOP 3) promote their own FOP.

The proliferation of new FOP makes the payment market more fragmented. Airlines willing to reach more customers in every market need to support these FOP, without bearing the cost and complexity. Payment gateways enable airlines to reach customers in all markets.

Payment is not limited to the ticket purchase. It covers all the transactions during the booking process and the journey. What if a passenger could enter a lounge or go through a security fast track like they enter the subway (In London, not Paris)? The FOP should be convenient for customers’ online use as well as for a physical use, like access control.

If some FOP are cheaper for airlines to accept, it should be up to them to incentivize customers in using them. Indeed customers tend to have their preferred methods of payment (e.g. a bank credit card, a neobank card, a mobile app) which come with perks, and the perks are funded in part by merchant fees. Airlines have perks too (e.g. seat selection, priority boarding, loyalty points) which may be attractive to customers.

Promoting the airline’s own FOP may sound ambitious. Retailers like Amazon do it with Amazon Pay, or Alibaba with AliPay. In a corporate sale environment, the adoption of the FOP can be part of the airline’s contract negotiation. However in a leisure world, FOPs are ubiquitous and used by consumers daily, not only for air travel. Unless the airline can propose the same value as online retailers, they won’t be customers’ preferred option.


The future of digital airline payment

Air Asia is a pioneer in building a lifestyle brand, not only an airline. Many airline brands are household names, offering co-branded credit cards and loyalty programs, with the potential of becoming a “wallet”. The airline wallet can be used as a payment method for any type of physical and online purchases, while giving access to airline perks and other special offers.

Going one step further, airlines may reach out to communities that have moved beyond credit cards. For example Web3 communities in the metaverse may use crypto-currencies within their own environment and for the payment of physical goods and services.

While credit cards will continue to serve the airline industry for the coming years, digital payment alternatives pave the way to a more convenient and integrated experience for customers, and to more cost effective and flexible solutions for airlines.

5 points to watch for business travelers who pick rail as an alternative to air travel

5 points to watch for business travelers who pick rail as an alternative to air travel

While safety, on-time performance and cost effectiveness made air travel the preferred mode of transport for business travelers, the new priority is on sustainability and carbon emission levels, and air travel cannot compete with rail on this metric. As business travel is coming back after the pandemic, is rail ready for business travel?

If we take a simple example of a trip from Geneva to London. By plane, the journey takes 1 hour and a half, produces about 100kg CO2 and costs about EUR 100. By rail, it takes about 8 hours with 1 stop (change station in Paris), produces about 5 kg CO2 and costs about EUR 200. Let’s assume the environment-conscious business travel favors low CO2 emissions compared to time and cost. What are the other points to watch when traveling by rail?


The itinerary


Air journeys including connection use “Minimum Connecting Time (MCT)” which build a contingency when connecting between two flights. Rail journeys don’t include MCT, i.e. an itinerary may show a 3-minute time between the scheduled arrival of the train and the departure of the next one, which is barely the time to change platform. This may work with Swiss railways that operate like clockworks, but not in other countries. Railways don’t track on-time performance of trains, in the same way FlightRadar tracks flights. Railways don’t check if passengers are on board and won’t wait for connecting passengers, unlike airlines. Railways don’t provide assistance in case of missed connections like IATA airlines do. These differences mean that it is safe to add contingency in the rail itinerary compared to what a website may suggest.

Websites may not recommend the best itinerary if they don’t search the right websites. For example, I searched a solution to go from Bremen to Berlin in Germany. The Kiwi website recommended a combination of flights via Palma de Majorca on the way out and via London (7 hour self-transfer from Gatwick to Luton) on the way in, whereas the direct 3-hour train connection was available on DB website.


The ticket


Air travel has made electronic tickets and boarding passes a norm since 2010. For rail, electronic tickets exist at national levels but are not ubiquitous for international journeys. In a recent example I booked a train ride from Germany to France using the SNCF (French railways) website which required to collect the ticket for the DB (German railways) segment on a kiosk in a French train station! Not only the delivery of tickets should be completely electronic and mobile, but in case of changes the customer expectation is to receive the new document on the mobile phone.

Intermediaries such as booking sites could help by bringing transparency. Unfortunately, websites like Omio don’t make it clear whether the ticket is booked directly with the rail operator or with Omio. The Terms of Use say that it may vary. From a customer perspective it is important to know, at time of booking, who to deal with in case of changes or refunds. Especially if the change is due to the operator, the traveler needs to be notified and proposed with alternatives.


The travel experience


The longer the journey the more important is the travel experience, for the business travelers who’d like to be productive. Forward-facing seat, wifi on-board, plug for the mobile and laptop, spacious table are examples of attributes valued by a business traveler. Assuming that the train cabin is equipped, the traveler should be able to book the seat and access the attributes.

While airlines have designed products for business travelers (calling it business class), railways still operate first and second, with sometimes very little difference. In another example, the fare difference between a first and second class on SNCF is 2 euros on a 52 euro fare, or 4%. The ticket can be modified with conditions in both options, bags are included and electric sockets are available in both options.


The disruption management


The longer the journey and the larger the number of connections, the higher the chances of missing the last train and ending up in a station closed for the night. While IATA airlines accommodation for the travelers who missed their connection, railways don’t have procedures in place. This is simply due to the nature of the contract with the carrier: the airline commits to carrying a customer at a specific time to a destination, whereas the railway simply allows the customer to occupy the car.

In a recent example in Germany, after all trains to France were cancelled for the day, I ended in a German train station at night, with DB offering to sleep in a parked train. There are no alternatives by bus or no hotel accommodation. Although the cancelations are not the norm, the business traveler must know that in this case hotels will be full and the only option to stay warm for the night is the car reserved to refugees and homeless people.


The refund process


The airline refund process is not designed for simplicity and automation. The airline fare may not be refundable, but the government taxes and fees collected with the fare are not due in case of cancelled flight and should be returned to the customer. I’ve not seen yet an airline ticket which can clearly show the refund value in case of a customer decision to cancel or in case of airline decision. This would not only add transparency but also enable automation.

In the case of railways, the complication is augmented by the lack of real-time traffic information. In my example above, SNCF didn’t know that their train stopped in Germany and I received a confirmation that the train had arrived in Paris, while obviously it was blocked in Germany. In the case of DB, the refund process requires to fill an online form and send it by post. The claim request is not valid without a “confirmation of delay” which is not provided by the carrier, defeating the entire process. In this case, I eventually found a hotel room, at EUR 100 for the night, which is unlikely to be paid by DB or SNCF.



I love traveling by train and live in a country with excellent rail services, Switzerland. But rail is designed for mass local transit, not for internal business travel. This article looks at the gap between the modes of transport from a customer experience perspective, trying to use rail for business travel.

It shows that there is a clear opportunity for rail operators to capture business travel demand in a time of sustainability-consciousness, until air travel deploys massive fuel alternatives becomes competitive from a CO2 emission perspective. Adapting rail for business travel means addressing ticketing, itineraries, customer experience, disruptions and refunds.

If any rail operators have already implemented some of the changes suggested in this article, I encourage them to comment below and I will gladly feature them in a future article.

How Airline Business Travel Is Changing and Why That’s Okay

How Airline Business Travel Is Changing and Why That’s Okay

A new report by IdeaWorks and CarTrawler reveals how the COVID-19 pandemic, technology and greater awareness of the environmental impact of flying are changing airline business travel.

“It could be a year in which the airline industry recovers some of the profits lost during the pandemic. That’s the picture for leisure travel, especially in the burgeoning premium leisure sector. The recovery of business travel is complex and largely unwritten. Online meeting technology continues to march ahead, company employees are still working from home, corporations are setting carbon reductions tied to business travel, and the airline industry still struggles to find firmer footing. Innovation and resilience saved airlines during the pandemic, and these same traits will allow airlines to adapt to the changes wrought by new communication technologies and carbon emission concerns,” the report’s author, Jay Sorensen explains.


Business is tough, even at home

Is the work-from-home trend having a long-term impact on domestic business travel? It may not be the only factor at play, but as Sorensen points out business today is nothing like usual.

“Delta’s presentation during its 2021 Capital Markets Day reflects overall conditions in the airline industry. Domestic leisure travel is rebounding, while international travel has not recovered. Domestic business travel is off 40 percent from pre-pandemic volumes. Other carriers report similar results with United Airlines disclosing a 40 percent business travel revenue reduction and Air France a 50 percent loss of long haul corporate revenue compared to 2019. It’s a vast improvement from the depths of the pandemic when business travel ceased to exist, but still lagging,” he writes. “Commerce throughout the pandemic has largely remained strong. This has certainly not been true for the travel industry, and in particular for airlines. Business activity marched on without the benefit of salespeople, buyers, technicians, trainers, researchers, and board members traveling to factories, offices, and conferences for face-to-face meetings. This once oh-so- necessary activity was replaced with services such as Zoom, Meet, Teams, and Hangouts. Work-from-home changed from an elusive perk for the few to an expectation for the many. Travel, once a vibrant component of the corporate world, was sidelined by the swirl of all these changes. Business travel is returning but it won’t come back the same. Too much has changed during these 24 months, with the pandemic forcing companies to embrace online meeting tools. Savvy airlines will anticipate the changes and tap new areas of consumer spending for travel.”


It’s a new climate 

As Sorensen points out, corporate carbon budgets are leading to greater scrutiny of business travel.

“We are in an era in which corporations are actively engaged in climate change issues. CDP is a not-for-profit charity that operates a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Ten years ago, 3,500+ companies disclosed data to CDP; as of 2021 the number is more than 13,000.2 The list includes top airlines in the world, which have climate change scores ranging from A- to F. Environmental concerns were not included in the 2020 assessment of business travel trends; it’s something which must be considered in 2022. Corporate attention all over the world has turned to the issue of climate change and the reduction of carbon. For some companies, airline travel represents the largest share of their carbon footprint,” Sorensen writes.

But more than a challenge, one might argue this is a marketing opportunity. The aviation industry is already committed to drastically reducing its carbon footprint, but being at the lead in the climate change challenge can lead to favourable brand differentiation.

“Companies can use a variety of methods to reduce business travel emissions. This includes choosing airlines that promise to use sustainable aviation fuels, purchasing carbon offsets, substituting rail for airline travel, sharing ground transportation, booking fuel efficient cars and green hotels, taking nonstop flights, downgrading from business class, and substituting digital for actual travel. There are many alternatives for carbon reduction that don’t involve cancelling business trips. Airlines and other travel suppliers that embrace these tools will naturally capture a larger share of the business travel market,” Sorensen writes.


Face-to-face still matters to the bottom line

Sorensen finds there are still some key motivators pushing companies to allow business travel.

  • 25% for purposes of sales and securing clients
  • 20% intra-company meetings
  • 20% conventions and trade-shows
  • 10% support of existing customers
  • 10% tech support — equipment and IT
  • 10% professional services — clients and research
  • 5% commuters by air

“The resulting division between customer and internal audiences is approximately 65 and 35 percent respectively. That’s a meaningful distinction, that two-thirds of business travel is customer-facing and thus difficult to replace with technology,” Sorensen writes. “This brings us back to the December 2020 report which predicted a 19 to 36 percent drop in business travel due to the effects of online meeting technology. Developments since then continue to support the prior thesis, along with a new emphasis on the carbon emissions produced by business travel. Projecting reduced levels of business travel should include another caveat. The global economy could come roaring back with a dramatic increase in overall commercial activity above the 2019 baseline. This rising tide would lift all boats, and airline travel could increase above pre-pandemic levels. Whether this increase would be enduring or temporary is yet another unknown. The most likely outcome has the global economy gradually rebounding with a three- to four-year delay before achieving net growth above 2019 levels. The continuance or escalation of war in Europe and any future Covid variant activity would reduce economic growth and business travel activity.”

More on this last point later.


Business purpose is less important than high-revenue seating and posting the revenue share of the cabin footprint 

With all of this in mind, it’s also well past time to think beyond the aircraft cabin as little nooks for the affluent (first), the “business person” (business class) and everyone else (coach). These cabin classes were already growing irrelevant before the crisis we face now.

In fact, I’ve been writing about the need for airlines to change this thinking for years and years and years and years. Fortunately, many airlines have changed, by adding premium economy seating and differentiating their economy class product. Growing trends over the last decade hinted at what we are experiencing now, the rise of the freelancer entrepreneur, the advent of travel and lifestyle influencers, and the cautious corporate cutbacks ‘less flash more productivity’ which began during the last recession. They all predicted what Sorensen finds happening now.

“Airlines are already making the configuration change from business class to premium economy. A recent headline in the London Sunday Times proclaimed: Airlines ditch first class but offer fliers more legroom in ‘premium economy.’,” Sorensen writes. (Just imagine the grin on my face right now.) “The largest market potential for premium economy is offered by upscale leisure travellers. Glen Hauenstein, president of Delta Air Lines, said, ‘We believe that through the pandemic, we’ve created kind of a new class of customer which is a high end consumer who wants these products.’ This is a bold statement because new types of travellers are a rare bird in an industry that’s more than a century old. Mr. Hauenstein makes the argument that the loss of business travellers during the pandemic created the opportunity for wealthy consumers to book premium seats, which were traditionally held for corporate customers at high fares. Airline executives are enthusiastic about the revenue to be gained by mining this treasure of leisure passengers. The president of Delta added more rationale for the focus on leisure, ‘Demand for premium products is actually exceeding our coach products with the business traveler out. The big epiphany for us was there’s a much broader demand for this than just business travelers.’ He closes the argument by predicting the initiative will produce attractive profits.”


Where were are is not great, but it’s also hardly the end

While these factors and their impact on business class today are certainly something to consider, it’s also important to keep in mind that we are not back to anything like “normalcy.” So any progress or recovery we see is doubly-remarkable for happening in the most adverse conditions. The most pessimistic of us could not possibly have dreamt up this scenario in 2019.

Airlines have been pushing for a relaxation of mask requirements onboard and the lifting of other travel restrictions, and the world wants to move on from COVID, but the pandemic is still very much with us. Add to that the impact of the Russian invasion of the Ukraine, both socially and economically, and we are still living through a prolonged combination of business shattering factors that we haven’t experienced for many generations.

I don’t believe we can compare the current combination of crises to any previous black swan events in the history of aviation. Nor can we really compare this time period to previous historical crises of the 20th century. I would argue that we are currently experiencing is the equivalent of combining two historic crises.

The plague-cycle conditions of the Middle Ages (when it was generally accepted that society would by necessity retreat and isolate, from time to time, to avoid mass contagion and then return to “city life” when the most recent scare passed) most closely resemble to me what we are go through with the COVID-19 variant waves. In other words, we are not yet able to stamp this thing out completely, but we learn to ride the waves and return to life as we would have it for however long we can, retreat again to wait out the worst, and then return again. It’s hardly ideal, but society has adapted to these cycles before, and we can do so for however long we need to. There is always a percentage of people who will venture out, and airlines still have the huge advantage of being a superior method to cross continents. No other transport system in the history of humanity can get people there and back as quickly as a plane. That is unlikely to change soon.

Regrettably, we now also face a serious political crisis in Europe which threatens world markets and which inevitably will affect airline recovery. It’s not enough to point out that the Russian incursion in Ukraine is a humanitarian crisis in Europe. It is also affecting food supplies throughout the world and affecting global energy supplies. Should the crisis continue, or God forbid escalate, a global recession may not be far off. Airlines would have to adapt again.

Both of these events happening at once might seem too much for aviation to withstand, but the human desire to live and even thrive through chaos is stronger than the chaos humans are capable of bringing about. At least, to me, that has been the lesson of history. We have been through any combination of earth-shattering, lifestyle-shifting events many times over the centuries. And yet, here we are—not behind, but far ahead. I am writing this on a device connected to the world which is a useful tool to perpetuate the momentum of business even when ordinary life has come to a grinding halt. It is nothing like meeting with you in person to give you this pep talk, but it will do for now.

Our expectation for recovery to business “as was” in aviation should be tempered. It doesn’t really matter who flies or when they fly as much as the fact that people are flying—despite all of this—because flying is an essential component of modern society. I think it’s really remarkable that Sorensen’s data shows 10% of business flying demand is produced by IT-related needs. Computers have changed our lives for the better, but they are not all of life. And they too—from development to production to distribution—rely on aviation.

What must happen is that governments should continue to recognise aviation as vital social and economic infrastructure. In other words, if things get grim, airlines should get a helping hand. After all, airlines pay lots of taxes.

And, as Sorensen says: “Ours is an industry which knows how to persevere and serve.”

What Is the Future of Business Travel?

What Is the Future of Business Travel?

Business travel is dead. Long live business travel.

During a panel hosted by Guy Johnson, News Anchor, Journalist and Aviation Enthusiast, Bloomberg at the Aviation Festival, London, Alex Cruz, Senior Advisor and former Chairman & CEO of British Airways, Johan Lundgren, Chief Executive Officer, easyJet, Martin Gauss, Chief Executive Officer, Air Baltic, Shai Weiss, Chief Executive Offer, Virgin Atlantic Airways, and Julie Shainock, Global Managing Director, Travel and Transportation Industry, Microsoft, shared their views on the future of business travel in a changing marketplace.  

“We know that we’re going through rough periods. I think it will recover. But I don’t believe that the permanent impact on business travel will be COVID or COVID related endemic measures. It will be CSR (corporate social responsibility) sustainability measures that corporations will adopt, at least for a while,” said Alex Cruz, Senior Advisor and former Chairman & CEO of British Airways. “I still want to test what happens when you have to compete between two different suppliers and who’s going to travel, etc. But I think, yes, the COVID related business travel recovery will happen faster than it seems. But there will be some permanent impact from a sustainability perspective at a corporate level.” 


“The day trip to Brussels or a day trip to New York may be cut down by technology”

Shai Weiss, Virgin Atlantic, agreed with Cruz, adding, “The day trip to Brussels or a day trip to New York may be cut down by technology—you have Microsoft here—or because of CSR. But we’ve already started to see the recovery of the business traveller. I think, in the estimates, we’re saying business travel may return to prepandemic levels probably in 2023. We’re already 30% booked on business travel into the summer of next year versus where it was in 2019. And that’s not a bad indication of where it is. But the truth is the equilibrium is unclear to any one of us because every time we predict something, something comes up.” Weiss added that pandemic measures affect how executives who might otherwise travel business class choose to use their time, avoiding travel because the health requirements may add too much time to the journey. “I think they’re more sensitive to the allocation of time.”  


Martin Gauss, CEO of Air Baltic, said the business traveller profile is changing. “We are still 30% down on the total passengers, but in business class, compared to 2019, it’s only 15% down. So we see more proportional business class travellers. It’s not the corporates because they don’t fly business. It’s a lot of other people who now want that freedom, that privacy that you have in business class. We see business class travel coming back, but not the same people,” he said. “I think more people will look for all the things you have if you book business class…The big corporations probably will not allow shorter trips on business, but individuals, smaller companies, will go for it because of the things you have if you’re travelling businesses. That’s how we see today, and that’s how we plan our hybrid model. We have a full-service business class in the front and an ultra-low-cost cabin in the back. It works very well, especially now in the pandemic.”  


“The global financial crisis, there was a debate then, that business travel would never come back to the same levels, we just wouldn’t spend the money. It took, what, two years to recover?”

Johan Lundgren, CEO easyJet reminded attendees that there have always been doubts about recovery following a black swan event. Still, the demand for all travel classes returns, sometimes sooner than expected. He also sees a shift in the business travel profile. “You remember the global financial crisis, there was a debate then, that business travel would never come back to the same levels, we just wouldn’t spend the money. It took, what, two years to recover? And after 9/11 [there were predictions that] people would not fly…I think it’s difficult to see at this point, to know exactly what will happen. I think that there will be some mitigation. There will be more businesses in general, and there will be more growth from that end…The mobile and the remote work has blended. People will go on more leisure trips, I think, and take two days also to work. So that’s a type [of travel]. How do you categorize thatas business travel or as holiday travel?” 


“Face-to-face travel can never be replaced. That is something that will always be there”

Julie Shainock, Global Managing Director, Travel and Transportation Industry, Microsoft, spoke to whether technology would make a significant difference, in this crisis, with people opting out of travel altogether now that virtual meetings are more accessible than ever to handle remotely. “You know one of the tools—Teams or Zoom—now, Teams would be my preference. But it’s a tool that’s here to stay. But there’s one thing I will tell you hybrid events are here to stay as well. I think you’re going to see more and more hybrid events come out as we move into 2022 and 23. You might have a mainstage event here, and then you might have regional events somewhere else. But the one thing I will say is face-to-face travel can never be replaced. That is something that will always be there. I agree with everyone. You may not do that one day or one-hour short trip—although I did do one recently, I went for a three-hour meeting. But you will still have face-to-face meetings. Nothing will replace that. I recently was at some face-to-face meetings, where we got more done in four days than we did in the past four months, just by being face to face. Those are the kinds of things that will never be replaced from a business aspect. The other piece I think you’re going to see is this whole leisure/business, and the leisure/leisure aspect will play a role going forward. People will do both, just depending on where they are and what they can accomplish.” 


Shainock also had an optimistic prediction for future events, even as Covid-19 continues to complicate travel. “I mean, you have 250 million daily active users on Teams. That’s a big number. You’re going to continue to see Teams being used in this way. But my preference would be to travel. I think the World Aviation Festival, Terrapin, did a fantastic job of getting the PCR tests available to all of us here so that we could come to a meeting. I think that you’re just seeing some of the flexibility that the world will adjust to. I do think we’re going to adjust over time. This won’t be the last variant. There will be more variants. I think that it will eventually move from the pandemic directly to an endemic, and then it’ll be more like the flu, where we get a vaccine every year.”