AirPlus International has started channelling hotel folio data to clients in the United Kingdom and is working to improve hotel data in other markets, including a pilot folio program with Accor. The corporate payment specialist also is expanding partnerships with rail and car rental providers to make their services payable through the AirPlus lodge card. Meanwhile, AirPlus in China is experiencing significant growth as competitors face regulatory restrictions.
Chairman Patrick Diemer at a press briefing here outlined data expansion plans and announced a record AirPlus profit of €25.1 million for 2010, up from €17.2 million in 2009 and a previous high of €20.2 million in 2008. Customers charged a record €21 billion, up from €17.1 billion in 2009 and €18.1 billion in 2008. In Germany and the United Kingdom, where AirPlus is the issuing bank, volume reached €8.8 billion, similarly outperforming the €7.3 billion in 2009 and the previous record of €8.5 billion in 2008.
AirPlus for 2010 also reported a 12 percent increase in total flight volume and a 5 percent rise in transaction numbers by existing clients. The company announced that it picked up more than 2,000 new customers during 2010, bringing its total to 35,000. According to Diemer, AirPlus is the third-largest handler of payments worldwide for International Air Transport Association air tickets in the business-to-business market, and second in Europe. He estimated that AirPlus claims a market share in Europe of 42 percent, two percentage points behind American Express.
Diemer said he expects AirPlus in 2011 to further improve its figures. The number of flights it handled in the first quarter was up 9 percent from the same period last year and he conservatively estimated the company's full-year volume would increase by a similar amount.
Air ticket prices also are moving upward. In February 2011, the average was €523, up from €499 in the same month last year and almost identical to the February 2009 average of €522. However, the average ticket price still is nowhere near the pre-recession average of €583 in February 2008. Similarly, at a press briefing this week in New York, AirPlus for March 2011 reported an average ticket price of $672, up from $632 and $645 in March 2010 and 2009, respectively, but well below the March 2008 figure of $863.
A return to premium cabins helped to push higher average ticket prices. AirPlus said 14 percent of the tickets it handled in 2010 were in business class, above the 2009 and 2008 figures of 8 percent and 12 percent, respectively. Today's mix, however, remains very different from 2001, when 43 percent of tickets were in business class.
Product Development
AirPlus aims to bring its data standards up to the same level of detail for hotel, rail and car rental as for its core air specialization. In the United Kingdom, the company's second-largest market after Germany, AirPlus has a partnership with hotel technology specialist Conferma to allow direct billing and settlement through the automated generation of unique virtual card numbers for accommodation bookings. AirPlus U.K. managing director Yael Klein said that as of February 2011, the joint product with Conferma is generating folio data for guests. As a result, clients receive details from the total hotel bill, including number of room nights and a breakdown of the room rate plus extras such as food and beverage. Klein said the Conferma partnership also now allows clients to attach to each transaction such corporate references as cost center, employee identification and budget codes.
Hotels traditionally have been a problem area for card companies in terms of management information quality. Buyers often receive little more data than the name of the hotel and the total amount paid. Companies such as MasterCard have made some headway in taking direct folio feeds from hotels in the United States, but progress in Europe has been very limited. Diemer told BTNthat AirPlus is trying to improve the situation. "We are doing a lot of steps with hotels," he said. "It is not all to the level of folio data but customers will at least be able to see the number of room nights. We also have a direct connect pilot for folio data with Accor."
AirPlus also is expanding acceptance of its lodge card for car rental and rail. "When I ask customers what they want us to improve on, this is the most mentioned requirement," said Diemer. In Germany, AirPlus handles as many transactions for rail as for air thanks to a long-standing partnership with Deutsche Bahn. Swiss rail provider SBB also accepts the AirPlus lodge card, as does SNCF, although only through its business portal.
Diemer said an announcement on a deal with a large international rail operator is imminent, and talks have started with such U.K. rail booking tools as Thetrainline.
Meanwhile, AirPlus has expanded its contract with Avis to be global rather than just European in scope and is looking to sign more car rental vendors.
AirPlus this year also "wants to go into the MICE market," according to managing director Klaus Busch, speaking during the New York briefing. "We started this in Germany and are rolling it out in Europe" by connecting to meeting-booking platforms and hotel chain back-office systems. Busch said the company is trying to prioritize system connections "to get the majority of the data." Similar to central accounts for air, AirPlus typically issues a "limited number of meeting cards per customer."
Huge Growth In China
In China during 2010, AirPlus increased revenue by 84 percent, making it the company's third-largest market worldwide. Diemer attributed the near-doubling in business to €108 million to growing interest in travel management in China and the AirPlus advantage of operating with far less regulatory interference than its rival corporate payment providers.
Payment networks American Express, Visa and MasterCard are not permitted to handle payments in the renminbi, the Chinese national currency. The Chinese government is building its state monopoly UnionPay network for a market that MasterCard forecasts by 2020 will overtake the United States as the world's largest. UnionPay also is the only network allowed to handle transactions in foreign currencies for Chinese cardholders traveling abroad. The U.S. government has filed a formal complaint with the World Trade Organization over China's denial of access to foreign-owned payment networks.
Diemer told BTNthat AirPlus has evaded the problems besetting its Western commercial payment rivals because it is a Universal Air Transport Plan issuer. "Not every regulatory institution looks at us as a credit card company," said Diemer. "Because UATP is 100 percent an airline acceptance vehicle, its regulatory authorities say we are a billing system, which puts us in a different category and not in competition with UnionPay. Our lodge card is the only working lodge card in the Chinese market, which explains some of the rise in our volume."
Diemer said AirPlus rivals "are smart competitors and they will find solutions over time." He added that AirPlus in China has recruited more staff than its revenue there currently merits in anticipation of a continuing steep rise in business. When AirPlus entered China in 2008, its initial customers were Western-based corporations, but Diemer said last year's improved figures also reflected the first substantial contracts with Chinese national companies, which "are opening up to business travel management."
~ Mary Ann McNulty contributed to this report
The article originally was published in Business Travel News.