London - China in the coming years could become AirPlus International's top
market worldwide, according to chairman Patrick Diemer. Currently the only
company to offer a lodge card in the Chinese market, Diemer during a Tuesday
press briefing here said he expects both American Express and Citi during 2013 to
finally launch competing products after clearing various regulatory hurdles in
recent months. Diemer said AirPlus may respond by moving into what he described
as "tier-two cities" to target Chinese national corporations while
its major U.S.-based rivals make their first moves in the market.
AirPlus since 2008 has been operating in China, its fastest-growing market in 2012. While the Chinese government has
put up various obstacles for payment products issued through the American
Express, Visa and MasterCard payment networks, AirPlus has traded with far less
regulatory interference because it issues through the airline acceptance
vehicle Universal Air Travel Plan. AirPlus in December opened an office in
Shenzhen, complementing it's pre-existing locations in Beijing and Shanghai.
However, American Express and Citi both have gradually been allowed more
freedom to issue in the country. Citi in September 2012 announced its first
sole-branded cards for China, issued through Visa, MasterCard and the Chinese state-owned
payment network UnionPay.
AirPlus dominates its home
German market with a market share of 65 percent. Diemer said that with very
robust competition in the United States and United Kingdom, Asia/Pacific will
be the primary region for AirPlus expansion plans during the next decade, along
with Latin America. "We see a lot of demand in Asia/Pacific with not much
competition," he said. "While 90 percent of our business today is in
Europe, Asia will become much bigger for us in the next five to ten years, and
China has the potential to become the largest single market—even larger than
Germany.
"Citi and Amex have both
made announcements about lodge cards in China," Diemer continued. "We
expect them on the ground at some point this year." He said he welcomes
the competition to "help make the cake much larger," but added that
AirPlus likely will respond. "We are probably in our second stage of
development in China," he said. "We started with the local
subsidiaries of global companies, such as Bayer, Philips, Coca-Cola and
Unilever. Now we are working with global companies headquartered in China, like
Lenovo and Huawei. If we move into the tier-two cities, that would be a third
stage of development. We found companies like BCD Travel, Carlson Wagonlit
Travel and HRG moving into China around the same time as us. Now Chinese travel
management companies are waking up to that kind of business too."
Eyeing Australia, Virtual
Card Growth
AirPlus also has its sights
on Australia, where Amex has almost a 100 percent share of the lodge card
market. Virgin Blue, the country's second-largest airline, in January started
to accept the AirPlus Company Account lodge product. "The travel industry
there is keen not to have just one provider," said Diemer. "Because
Amex is a TMC as well, not all the other TMCs want to work with it."
AirPlus in Australia also
launched its single-use virtual card number offering called Integrated Data and
Acceptance (better known as AIDA). In Europe, AIDA virtual card numbers primarily
are used to pay for hotel billbacks and transactions with low-cost carriers. AIDA
is the company's fastest-growing product in the United Kingdom, with volume growing
44 percent last year, following growth of 55 percent in 2011 and 48 percent in
2010.
The United Kingdom is poised
to further grow its AIDA business with the launch this month of a meetings and
events payment solution. Available both to corporate clients and event
companies, the solution is a centrally billed account but with single-use
numbers appended to each payment. "Reconciling spend is a nightmare for
event companies," said AirPlus U.K. managing director Yael Klein.