As the pandemic accelerates the adoption of alternative payment methods, ensuring a payment system that is not only seamless and secure, but tailored to local preferences is crucial to drive aviation's recovery, says Roc Harry, head of global enterprise eCommerce, APAC, Worldpay from FIS.
Covid-19 has triggered a demand shock unlike anything the airline industry has ever seen. Industry data shows that Asia-Pacific airlines’ full-year traffic plunged 80.3 per cent in 2020, which was the deepest decline for any region. To stay afloat, airlines are finding new ways to stimulate demand.
‘Travel bubble’ initiatives, such as the one between Australia and New Zealand, and ‘green lanes’ allowing essential and business travel are currently underway in the region.
While airlines opportunistically chase demand, equally important is the need to tailor their payments strategy. Integral to the travel booking experience is the payments process. The way we pay is constantly evolving, and the pandemic has further brought about a shift, accelerating the adoption of alternative payment methods such as digital wallets and buy-now-pay-later (BNPL). As planes gradually begin taking to the skies, offering the right payment types and ensuring a convenient seamless payment experience will be crucial to attract, convert and retain customers.
The right payment mix matters
At least one in four travellers (28 per cent) would drop out at the checkout and book elsewhere if their payment method wasn’t available, according to research by Worldpay from FIS. Another 18 per cent surveyed indicated that they would reluctantly use a different payment method, but they wouldn’t book with that airline again. Effectively, this means that airlines are losing a significant share of customers, sales and loyalty simply by not taking payment preferences into consideration.
So, what is driving travellers’ choice of payments for flights? The research shows credit cards continue to dominate flight payments, with 52 per cent of purchases made across credit cards globally. However, if we dig into the data a little deeper, the payment landscape has considerable variance across different markets even within Asia-Pacific alone. For instance, China bucks the credit and debit card trend with only one-fifth of total payments made on cards; digital wallets such as WeChat and Alipay own this market with 44 per cent and 33 per cent respectively.
Additionally, 44 per cent of travellers indicated they would like to pay for flights in instalments. BNPL has been steadily growing in popularity in the past few years, and it is now taking off in the travel vertical as well. Just last month, American Express launched a BNPL option for air travel for its US customers. Closer to home, in Asia-Pacific, partnerships between Air Asia and Zip, and Jetstar and Afterpay have been formed to offer BNPL to Australian consumers.
Mobile and social journeys are influencing bookings
Consumers are increasingly making purchases on their mobile devices, and travel is no exception. Across all countries surveyed, just under half (46 per cent) of respondents usually purchase flights on a desktop. This figure is even lower in India and China – the two largest countries in terms of population size – with only 23 per cent and 15 per cent of travellers respectively purchasing air travel on a desktop browser. Hence, if airlines do not nail the mobile experience, they risk alienating a huge segment of the market.
Social selling is also moving front and centre, with 43 per cent of travellers indicating that they click through via social media channel such as Facebook, Instagram or YouTube to book a flight. While almost every airline now has its own mobile app, convenience is driving the customer experience – airlines need to ensure that they are providing a seamless transition between social channels and the mobile app to drive conversions.
Trust and convenience go hand-in-hand
A frictionless payment process should not be underestimated. In fact, consumers ranked a smooth payment process as the third most important aspect of their travel booking, almost on par with customer service and a booking confirmation. Examples of “friction” in the payment process include a declined payment without explanation, an unexpected site redirect, or the requirement to populate card details at a later date. For airlines, taking steps to make the payment process as streamlined, efficient and frictionless as possible can improve the user experience and help build loyalty.
Needless to say, the checkout page is a key part of the booking experience, and providing the option to save user details could prove beneficial. 43 per cent of travellers are more likely to book if their personal details are pre-filled on the checkout page, and 40 per cent are more likely to book if they can use payment details saved in their browser.
While it’s essential to make the payments experience convenient, it’s equally important for airlines to gain the trust of their passengers. Apart from allowing a guest checkout, airlines can build trust and promote security throughout the booking process via a range of methods, for example, by offering third-party consumer protection, providing industry regulator logos and digital authentication logos (e.g. Verified by VISA, Mastercard Secure), and showing positive user ratings or reviews.
Another key factor for airlines to consider is the management of cancellations, refunds and chargebacks in these challenging times. One of the best practices for airlines to process quick refunds, should there be changes in travel restrictions, is to adopt real-time payment offerings such as Visa Direct. Being transparent about the refund processes and keeping travellers informed is key to gaining trust.
For airlines, trust and convenience together pave the way forward to repeat bookings online. It’s no longer about striking a balance between the two, nor is it about choosing increased security at the cost of convenience, or vice versa. Instead, it is about delivering an experience that supports the varying expectations of customers in Asia-Pacific and around the world.
The resurgence of the travel industry is not something that will be achieved overnight. Airlines, hotels, and travel companies will take some time to get back to where they were pre-Covid-19. Building trust and loyalty with customers becomes all the more important to aid with the recovery.
The pandemic also offers the industry a chance to reinvent itself. We have seen a great deal of innovation from airlines in their response to the crisis. Some have even pivoted to new segments to diversify their revenue streams, such as Air Asia moving into the food delivery sector and Singapore Airlines leaning into their online retail marketplace.
The travel sector may be changed forever, but what is clear is the role that payments can play to unlock the full potential and power the future of travel. Savvy airline operators will prioritise traveller-centric payments journeys that are secure and convenient, and tailored to the needs and expectations of tomorrow’s digital consumer.