In 2023, it was 65 % more seats(Mckinsey).
Airlines are becoming more adept at identifying pockets of demand and managing schedules to fit them, which aids their quests for growth.
Want to make a hassle-free aircraft reservation?
Fintech is the secret sauce in the booming aviation domain!!
Overview
Fintech companies are transforming the aviation sector by offering powerful data analysis tools, specialized financial services, and electronic payment alternatives. Due to these progresses, airlines may maximize their revenue through flexible pricing strategies, which offer additional insights into client preferences and spending habits. Machine learning, blockchain, and artificial intelligence are a few of the technologies that can be used to improve operational efficiency.
Numerous challenges confront the global aviation industry, including evolving customer expectations and increasing cost pressure. Fintech collaboration is essential to resolving the problems. Airlines are specifically looking into new payment methods as a result of changes in customer behavior and technical improvements. These changes are part of a larger trend toward more convenient, adaptable booking experiences, like those provided by Amazon and other online retailers.
The payment options that airlines accept have a big financial impact. The industry processes over 2.9 trillion payment transactions annually, worth $803 million. Significant expenses associated with the transactions account for a large amount of the airline’s earnings. While accepting credit cards is handy for consumers, airlines may find it costly to process them. Fintech companies can lower expenses and provide more effective payment options.
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The fusion of fintech and aviation has gained popularity. Payments and fintech should be priority objectives, according to more than 80% of travelers. Large financial institutions and fintech businesses have been following this trend, entering this industry and setting up integrated payment, travel, and technology platforms. These advancements address shifting consumer preferences for digital, mobile, and cashless transactions, among other things. Tokenization and last-mile digitization are two fintech solutions that address these shifts by streamlining and standardizing the passenger payment process.
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The Top 10 Airlines
- Qatar Airways.
- Korean Air.
- Cathay Pacific Airways.
- Air New Zealand.
- Emirates.
- Air France/KLM.
- All Nippon Airways.
- Etihad Airways.
- Singapore Airlines
- Turkish Airlines
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Role of Fintech in Enhancing Airline Operations and Customer Experience
Standalone Fintech – Disruption Guarantee No Matter Where You Book
Due to a combination of factors such as weather, capacity constraints, and staffing shortages at airlines, delays have increased as the travel sector returns to normal. At the moment, 20% of flights have delays, with one-third of those delays lasting more than an hour. Users of Hopper have grown to adore the app’s Flight Disruption Guarantee, which helps them make sure they get to their destinations on schedule.
However, what if you made a straight aircraft reservation using your credits? And what if you made your reservation with another OTA that doesn’t provide the same instantaneous, hassle-free flexibility? Now, non-Hopper bookers can include a Flight Disruption Guarantee in their booking that they made elsewhere thanks to Hopper’s new Standalone Trip Protection. Hopper will pay the costs if you need to reschedule a flight that is delayed.
Airlines and Embedded Banking
Passengers of airlines now have quick access to airline-branded financial tools including reward points, credit cards, debit cards, and payment applications thanks to embedded finance. Increased in-flight and airport expenditure will follow, promoting an effortless travel experience. Clients will steadily earn loyalty points that they can use for their subsequent flight or other relevant services. They will have an incentive to keep flying with the same carrier.
Long after their trip, customers will still use the airline’s financial tools, which will generate income for the airline from interchange and financial services. While flying and at the airport, travelers can easily access a variety of financial services.
- Digital wallets, transactions, white label credit and debit card issuing, and streamlined payment options.
- Within the digital ecosystem of the airline, passengers control their accounts and have access to personalized financial services.
- Passengers have a smooth and consistent financial experience both on the ground and in the air.
- Airlines provide unique cash incentives, prizes, and loyalty plans that are tailored using data to each passenger’s preferences and actions.
- A customized strategy that improves client interaction, builds brand awareness and loyalty, and promotes repeat business.
- The airline-passenger relationship is strengthened and overall passenger happiness is increased when airlines use Mbanq’s platform to provide a seamless and satisfying travel experience.
- It is possible to obtain a portion of the money that travelers spend both at the airport and on board.
- Loyalty programs that are data-driven lead to higher consumer spending.
- Enables safe and effective payment processing, saving airline partners money on operating expenses and streamlining financial operations.
- Upselling and cross-selling opportunities exist for financial services and goods including foreign exchange and travel insurance thanks to data analytics and personalization.
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Blockchain and Airlines
Through IATA(International Air Transport Association) studies, research, and development initiatives, the Travel Grid idea is being designed in partnership with commercial aviation partners. The idea behind this proposal is to establish a shared grid that would facilitate the growth of a quick, efficient, flexible, and democratic environment that offers Blockchain capabilities that the sector can use. In a similar vein, the massive technology company Apple has established a platform and ecosystem that enable solution developers to make apps.
With the help of the Travel Grid vision, airlines, travel agencies, hotels, and other businesses may reduce their expensive overhead and engage in real-time digital interactions. The digital identity management infrastructure that supports industry reforms like NDC and One Order would be built on top of the Travel Grid.
The entire procure-to-pay process, including managing agreements, tracking and enforcing delivery, reconciliation, rectification, invoicing, and payment, may be made much simpler with the help of Travel Grid. Digital assets may move fluidly throughout the value chain thanks to the Travel Grid, which opens up new retail options and improves operational efficiency while providing a smooth traveler experience.
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Blockchain Projects in the Travel Sector
This section elaborates on a non-exhaustive list of travel-related projects that use blockchain technology.
Aeron markets itself as the Aviation Safety Blockchain. Their business model’s first use case is the provision of pilots’ flight logs, which increases security when working with aircraft owners or employing private pilots with a license.
According to Loyyal, consumer incentives are being created, rewarded, and managed in a new way. It aims to lower the price of settlement and reconciliation while also permitting the expansion of the partner network. Furthermore, it says that delivering individualized products with real-time information will enable the growth of marketing possibilities.
Ozone has been promoted as a substitute air transportation distribution system. The idea focuses on the necessity of getting past legacy system constraints and opening up a whole new variety of products. Ozone wants to make it possible to have a secondary market with lots of buyers and distributors.
SITA is investigating the possibility of preserving a common ledger of flight information with the involvement of designated authorities in collaboration with several airlines and airports. FlightChain32, a study published by SITA Lab, builds on the findings of SITA’s research and development into Smart Contracts, which was conducted in collaboration with British Airways, Heathrow, Geneva Airport, and Miami International Airport.
TravelBlock
TravelBlock suggests leveraging blockchain technology to develop a substitute for the established Global Distribution System (GDS). TravelBlock promises to reduce costs, improve security, and provide customers greater insight and transparency.
TravelChain
TravelChain describes itself as an open-source blockchain that is intended for management by all market participants in the travel sector. It is designed to include features that facilitate the exchange of ratings and reviews in addition to information on services.
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CASE STUDY: Fintech Integration by Hoppers into Airlines
When the travel app Hopper was started in 2015, sales of plane tickets accounted for the majority of its first income. A few years later, the company expanded its travel fintech business, offering customers financial products with algorithmic capabilities like cancelation insurance and price freezing. Since then, it has increased the scope of those services and made them a B2B option for other travel agencies. Hopper has amassed 100 million mobile users by providing gamified app experiences and consumer-friendly financial products. Other businesses have experimented with this. For a few hours or days, you can lock in your airfare with airlines, for instance. Other travel websites enable refunds.
However, they allow clients to freeze pricing on cars, hotels, and flights, and they offer their core fintech offerings on both hotels and flights, such as the ability to cancel for any reason. No one else has truly expanded these products to include every aspect of the travel budget like this. The sheer magnitude of this is the second distinctive feature. Nearly 50% of our clients associate a financial product with a particular transaction. They purchase 1.5 financial goods on average. Therefore, there is a core following there. It’s a component of what their clients anticipate from us.
They observed that the financial solutions they provided on Hopper were bringing in new business and producing revenue for them. Customers in North America spend an average of $40 more per booking when they visit Hopper to make travel-related purchases. They act in this way because they desire protection, freedom, and choice.
They understood that we might unlock an additional $400 billion to $600 billion in travel expenditure that is currently unrealized if they could provide our financial solutions to other businesses, such as airlines, hotels, or even rival corporations. That represents fresh funding entering the system.
They thus introduced Hopper Cloud, sometimes known as “risk as a service,” in 2021. It gives partners access to their financial solutions and gives customers flexibility and refundability.
Numerous businesses have approached Hopper Cloud because acquiring new clients at a high net promoter score results in increased revenue, loyalty, and conversion. These days, practically everyone is searching for new sources of income because business travel is still quite low. Two years ago, Hopper Cloud brought in zero dollars; today, it accounts for half of our global sales. It is growing at a rate that is in the upper thirties.
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