Airlines recently have introduced several online payment mechanisms in an effort to cut costs associated with processing card transactions. While most of these initiatives remain focused on the leisure market, analysts said they inevitably would leak into the corporate market.
In June, Northwest Airlines became the first in the industry to begin accepting payments for tickets via PayPal, a payment tool used largely with such smaller-scale online commerce as EBay. Since then, both Southwest Airlines and Midwest Airlines have begun accepting PayPal. In August, US Airways also announced that it would soon offer PayPal as a payment alternative.
Both AirTran Airways and Aloha Airlines allow customers to purchase tickets using CheckFree accounts, another method of eschewing credit or debit card use and paying directly from a checking account.
In late July, JetBlue Airways became the latest of several airlines offering the Bill Me Later payment option, another non-credit-card form of payment.
Scot Bealer, vice president of worldwide sales for the Universal Air Travel Plan, said these are only the beginning.
"Several very large airlines in the United States are getting ready to do what Aloha and these others are doing," Bealer said. "We see a progression toward using a different way to buy things on a larger and larger scale."
Although it is difficult to imagine companies with large travel programs adopting PayPal as their chief airline payment method, the new offerings indicate that airlines are focusing even more of their efforts on cutting transaction fees as they seek to improve their bottom lines.
On one hand, analysts said it gives buyers who are able to incorporate alternate payment methods a little extra leverage at the negotiating table, as they are in effect saving the airlines money with each transaction.
At the same time, some in the industry have warned that airlines will soon make more of an attempt to pass through card transaction fees to the customers, much like they did with global distribution fees last year
(BTN, Sept. 11, 2006).Such international airlines as Qantas and Singapore have adopted fees for card transactions. Analysts have said that model eventually could come to the United States. Corporate card suppliers, however, have indicated that they would fight attempts to transfer transaction costs to customers (BTN, March 5).