Air Transport Publications
Contact
Login   |   Register
jobs Jobs
events Events
bookmarks
My bookmarks
feature_main_image
Airlines

The customer always comes first

October 2012 saw the Airline Travel Payments Summit (ATPS) take place in London. Michael Smith, executive chairman of ATPS and managing partner at Airline Information, highlights some of the key trends and developments that were discussed
 

The phrase ‘plus ca change’ seemed to represent the recurring theme for delegates this year. Key concerns include preventing fraud and increasing revenue using alternative payments (KLM, for example, announced that Envoy Services will now be providing alternative forms of payment for the company worldwide). However, there has been a discernible change in what airlines focus on in terms of fraud and payments.

 

Tackling fraud

Fraud is still a matter of consternation. WorldPay’s Perfect Passenger Payments research indicates that fraud is costing airlines 1.5% of their revenue, which is a significant sum in an industry with wafer-thin margins – often only 2% in a good year. But of major interest, especially to airlines and hotels running loyalty programmes, is the increase in loyalty fraud. Over 60 people attended the loyalty fraud workshop as part of ATPS, with delegates coming from major airline programmes as well as hotels and rail companies – all of whom found out they had more in common than previously thought.

 

Justin Levitte, senior director of  41st Parameter, an online fraud prevention and detection company, commented: “As miles and points can now be easily turned into cash, fraudsters are actively targeting frequent flyer programmes (FFPs) and other loyalty accounts to take them over and exchange rewards for gift cards and so on. Airlines need to be aware of these rapidly expanding attacks to ensure their most valuable and loyal customers remain protected.” Delegates at the loyalty fraud session echoed this sentiment and outlined solutions for combating the issue. Demand was such that a follow-up workshop is being organised to allow airlines and loyalty programmes to share best practice on beating the fraudsters.

 

The industry continues to help airlines get ahead of the fraudsters in numerous ways. Speakers from airlines such as Air India explained how they have deployed Ogone’s new software system, in order to accept bookings online up to a few hours before departure (previously, sales were cut off online several days in advance of a flight), through to how Fraud Guardian from WorldPay is searching the data thrown up by fraudulent bookings to identify trends. In a closed session open only to airline and travel fraud managers (and not reportable as a result of confidentiality) those present outlined several initiatives that are getting them ahead of the rising trend of organised crime that is now actively involved in credit card fraud. Presenting a united front between merchants and law enforcement was highlighted as an important step.

 

Financial risk

Another recurring issue is that of financial risk. In the recent past, many banks have viewed airlines as high-risk businesses. One US airline was effectively pushed into Chapter 11 bankruptcy because its ‘holdbacks’ (the money retained by the acquiring bank to pay for any future travel, should a merchant cease trading) were dramatically increased. However, given the banking crisis and especially the issues with the euro, the roles have reversed and it is now the airlines that are viewing the banks as risky.

 

Willie Walsh, CEO of IAG, has already been on record saying that the company is working on contingency plans if Spain were to leave the euro. And the opening keynote speech from Carl Sharman, director at PricewaterhouseCoopers, focused on these implications. Airlines that don’t have a plan for what happens if their bank goes bust could face severe cash-flow issues.

 

However, it was not all doom and gloom. There is an upside to this changing view of financial risk. Companies such as GlobalCollect outlined how having multiple acquirers is not only a way of having a contingency plan if a bank goes bust, but as part of a coherent payments strategy, allows airlines and travel companies to route their payments to where the cost of acceptance is lowest. It is always helpful to have an extra bottom-line benefit, as well as some protection from a bank failure.


To download the PDF file for this article, you have to pay the amount by pressing the PayPal button below!


Filename: The customer always comes first.pdf
Price: £10

Contact our team for more information!


The Airlines channel

Industry blog
Highlights from the Cabin Refurbishment & Repair Conference
Jobs
Events

Comments

You must be logged in to post a comment.

Please login or sign up for a free account.

Disclaimer text: The views expressed in the above comments do not necessarily express the views of Air Transport Publications Ltd. or any of its publications.