Nigerian airlines, others to get new ticket transaction method

●African carriers experienced 5.7% rise in demand

Nigerian airlines that are members of International Air Transport Association (IATA) are expected to key into a new payment platform that has been successfully completed by the global airlines clearing house.
The test was the first “IATA Pay” ticket purchase transaction in a live test environment. The transaction was conducted in partnership with ipagoo, a UK-based fintech company.

IATA is a trade association of world’s airlines consisting of 290 airlines, primarily major carriers, representing 117 countries, IATA-member airlines account for carrying approximately 82 per cent of total available seat miles air traffic. IATA supports airline activity and helps formulate industry policy and standards.

IATA Pay is an industry-supported initiative to develop a new payment option for consumers when purchasing a ticket directly from an airline website. It is made possible by the European Commission’s second Payment Services Directive (PSD2) and the UK’s Open Banking regulation.

These regulations encourage use of so-called direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant. This method offers an extremely high level of security to both user and recipient and can be instantaneous.
IATA’s role is to develop an industry solution enabling airlines to make this payment option available on their websites. The live test conducted with ipagoo was done under the UK’s Open Banking framework with IATA Pay pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines and Emirates.

For airlines, the advantages of IATA Pay are cheaper payment option compared to other alternatives, highly secure, faster cash flow with instant/near instant payment to the merchant, simpler payment process resulting in fewer lost sales.

For consumers, the benefits include access to a new, simpler method of payment that is highly secure.
IATA’s Senior Vice President of Financial and Distribution Services, Aleksander Popovich, said: “Today’s consumers and especially millennial, 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.”

Carlos Sanchez, CEO, ipagoo said: “We are delighted to have completed the first Open Banking live transaction for the airline industry, helping IATA and its member airlines to achieve their goals of operational and financial efficiency. ipagoo’s technology provides a secure, multi-country banking service for IATA. We are at the forefront of development and innovation within the financial industry and committed to helping businesses and their clients take advantage of the opportunities provided by Open Banking.”

IATA is also working with Deutsche Bank on a prototype for Europe (excluding the UK), starting with the German market, which is expected to undergo testing in early 2019.

In a related development, IATA announced healthy but moderating global passenger traffic results for November 2018.
Total revenue passenger kilometres (RPKs) rose 6.2 per cent compared to November 2017, a slight deceleration from 6.3 per cent growth in October. Capacity (available seat kilometres or ASKs) increased by 6.8 per cent over the year-ago period, and load factor dipped 0.4 percentage point to 80.0 per cent. It was only the third time in two years that load factor fell on a year-to-year basis.

Wole Shadare