Emirates, other airlines test new system for passengers to buy tickets
Dubai - This new method is more secured and cost-efficient for airlines and will result in fewer lost sales.
By Waheed Abbas
Published: Tue 8 Jan 2019, 9:23 PM
Last updated: Wed 9 Jan 2019, 9:07 AM
Emirates airline participated in a live test of a new airline ticket purchasing system designed by the global aviation body International Air Transport Association (Iata), which will make buying airline tickets online easier and quicker.
As part of an industry-supported initiative, Iata conducted the live test successfully of Iata Pay in which direct debit transactions payments are made from the customer's bank account directly into the bank account of the merchant.
The testing process will initially be rolled out in German early 2019 and will be expanded to other regions later.
Apart from Emirates airline, Cathay Pacific Airways and Scandinavian Airlines were part of the live test conducted with ipagoo under European Commission's second Payment Services Directive, and the UK's Open Banking regulation.
This new method is more secured and cost-efficient for airlines as compared to other alternatives and will result in fewer lost sales, Iata said on Tuesday.
"Today's consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer. Iata Pay responds to these expectations. 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. One of Iata's strategic objectives is to support airlines' financial sustainability including controlling costs," said Aleksander Popovich, Iata's senior vice-president of financial and distribution services.
Saj Ahmad, an analyst at London's StrategicAero Research, said airlines are always looking for avenues to slash costs and ticketing can be a cumbersome process.
Direct debit fund movements eliminate a sizeable portion of costs and thereby provide increased revenues for airlines. While customers know that their payment(s) will be processed immediately, dispensing the need of any intermediary. Direct ticket distribution is a key desire for all airlines if they could make it work. Processes like this actually prove beneficial for customers and airlines alike," said Ahmad.
Iata last month said that 2019 is expected to be 10th year of profit and 5th consecutive year where airlines on the whole deliver a return on capital that exceeds the industry's cost of capital, creating value for its investors. "We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer," Alexandre de Juniac, director-general and CEO, Iata, had said in a statement.
Iata had forecast that the global airline industry net profit to be $35.5 billion in 2019. The forecasted figures are slightly ahead of the $32.3 billion expected net profit in 2018, which was revised down from $33.8 billion forecast in June.