Airlines’ annual payment processing cost hits $25bn

The International Air Transport Association (IATA) has reported that airlines spend over $24.5 billion annually, or approximately $25 billion, on processing payments. This financial burden underscores the industry's challenges as it integrates digital technologies to enhance passenger experience and bolster financial stability. At the IATA World Financial Symposium and World Passenger Symposium in Macao, Sandrine Le Borgne, IATA's interim Director General and Chief Financial Officer, addressed these concerns.

She emphasized that while innovations such as AI, digital wallets, and biometric identification streamline passenger journeys, airlines must ensure these technologies are cost-effective and simplify operations. Le Borgne stressed the need to "realize the value that these innovations can create to make travel more efficient and improve financial resilience."

She highlighted that while AI assistants can revolutionize trip planning, booking, and airport experiences, airlines must maintain control over their data, commercial relationships, and service quality. IATA is advocating for modern airline retailing through an "offers and orders" framework, with seven airlines already implementing this approach, and more expected to adopt it by 2027.

Le Borgne stressed that AI is the acceleration mechanism for modern airline retailing, but it must complement rather than replace traditional processes. The association also called for integrating financial processes like reconciliation, settlement, and revenue accounting into digital transformation to avoid operational complexity.

Le Borgne noted that while digital payment methods offer convenience, they can impact transaction costs, cash flow, and financial risk. Therefore, airlines must carefully assess these effects when adopting new payment technologies. IATA also sees biometric identification and digital travel credentials as valuable tools, but their benefits are restricted due to the lack of interoperability across international airports and countries.