We interviewed Javier Orejas, Head of Banking Department, EMEA and Americas, International Air Transport Association (IATA), to discuss the new TIP initiative and global trends in the travel industry.
The Jet: What is happening in travel globally?
Javier Orejas: New payments solutions are evolving, and we are noticing an increase in the roll-out of mobile payment in some markets. The development of real-time schemes by governments and countries and the implementation of the Open Banking and PSD2 regulations are key developments that stimulate competition and the creation of new value-added services. The combination of these factors provides the airline industry with the opportunity to simplify and make improvements in the areas of price, speed, security and ultimately create a better customer experience.
The Jet: Please explain IATA’s objectives with the new Transparency in Payments (TIP) initiative.
Javier Orejas: The current landscape for payment services has changed dramatically over the past years, and new players and payment solutions are emerging which offer travel agents new options to remit customer funds to airlines. However, as it stands today, airlines only see the settlement costs after the fact, if at all. TIP is focused on providing airlines with increased transparency and control in the collection of their sales through the travel agency channel. No form of payment is barred by TIP, but agents can only use forms to which an airline has previously given consent.
The Jet: What is the business case for developing a separate payment solution for airlines?
Javier Orejas: Payment is one of the most important elements in the airline distribution chain. In 2017 airlines spent $7 billion on payment transactions and this amount is expected to rise to $15 billion by 2025. It is important that IATA supports its member airlines in the exploration of the revenue and cost-saving opportunities being created by financial technology and new regulation/deregulation in order to remain relevant to our members’ needs.
The Jet: Is the consumer really directly impacted? Do they care?
Javier Orejas: Airlines want to be able to offer their customers more choices in terms of payment methods that support a convenient and frictionless shopping experience, in addition to other payment methods such as credit cards. Several airlines already offer instant bank transfer payment as a form of payment. It is also a common practice in e-commerce
The Jet: Does IATA expect that the airline industry is committed to changing customer behaviour considering that a saving of $7 billion comprises a relatively small percentage of the airline ticket marketplace?
Javier Orejas: This is not about changing customer behaviour. It’s about giving airlines and their customers more options in terms of payments. With our experience and expertise in the financial and settlement services area in the air transport industry, IATA is well-positioned to support our members in this regard.
The Jet: What about integration?
Javier Orejas: We are having conversations both with airlines and their existing payment providers and gateways. A solution that is simple and quick to implement is key.
The Jet: Will the emphasis be on cost or product to drive more sales?
Javier Orejas: This is really a question for our members to decide. At this point we are still focused on the pilots and what we will learn from them.
The Jet: Who will carry the cost of the incentives?
Javier Orejas: Each airline makes its own decisions on which payment options it will support and whether to incentivise the use of a specific one, just as customers make their own decisions as to which option to use when making a purchase. IATA has no role in these activities.
The Jet: What is the roadmap for the new payment solution?
Javier Orejas: We are aiming to pilot the solution with airlines in Q1 2019.
The Jet: What is your view on bank partnership and how is this working for IATA?
Javier Orejas: It is a good and necessary development, and in the case of our collaboration with banks, I believe it is about complementing each other and sharing knowledge. Five years ago, fintechs challenged the banking industry but today it is all about collaboration. I believe that data will drive every business in future.
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