Low-Cost Carriers vs. Full Service Carriers
Going by the trend of personalizing everything for the consumer, global airline apps offer multiple options for payment that their users can choose from. An analysis of 65 airline Android apps, as part of videc’s App in the Sky 2019 series, concludes that credit card remains a popular payment method supported by airlines – both low-cost carriers (LCCs) as well as full-service carriers (FSCs). This is a reflection of user preference in most markets. As consumers diversify how they pay for things, airline apps need to broaden their payment offerings, keeping privacy and simplification of the process a priority.
A 100% of the 20 LCC apps studied for this parameter offered users the option of paying through their credit card. Against this, only 93% of the 45 traditional carriers accepted payment via credit in their apps 2Q19. Either way, this is the most popular mode of payment on airline mobile apps, and only those airlines who do not have native apps are considered as exceptions.
Although considered a faster and cheaper mode of payment, debit card options were available only with 75% of the LCC apps. For FSCs, this stood at 68%. These numbers could be a factor of certain regions/countries, especially Asia and South America, where use of debit cards is more pervasive than credit cards. Reduced incidence of debit cards could also be attributed to the rise of digital wallets which is all about convenience due to its all-in-one-payment method.
Even though e-wallets like WeChat Pay, AliPay, Paytm, PayPal, and OVO offer users the convenience of storing multiple payment methods in a single application, they are among the least integrated payment method across global airline apps. 2Q19 statistics show that 70% of LCCs offered digital wallets to its users as a payment option, while only 39% FSCs offered this. This could partly be due its local nature steeped with indigenous regulations. To succeed, therefore, digital wallets must deliver compelling value propositions that are strong enough to dislodge card-based payments.
There is a huge disparity between the number of LCCs that offer Internet banking to its users as against the traditional ones. While this tips at 40% for LCCs, only 16% of FSCs offered e-transfer to their Android users in 2Q19. Internet banking seems to be losing its sheen for airline payments, despite being a direct payment method used by billions worldwide for instantaneous and virtually-free payments settlement. This could be a consequence of newer, more easy-to-use and easy-to-incorporate payment methods introduced in the market.