Airlines’ annual payment processing cost hits $25bn

The International Air Transport Association (IATA) has revealed that airlines spend over $24.5 billion annually on payment processing, equating to around $25 billion. This financial burden highlights the challenges faced by the industry as it increasingly adopts digital technologies to enhance passenger experience and bolster financial resilience.

Sandrine Le Borgne, IATA’s interim Director General and Chief Financial Officer, disclosed these figures during the opening of the IATA World Financial Symposium and World Passenger Symposium in Macao.

While digital payments, artificial intelligence, and biometric identification streamline passenger journeys, Le Borgne stressed the importance of these innovations reducing costs, simplifying operations, and delivering sustainable financial benefits. She emphasized that airlines must ensure these advancements do not compromise financial resilience despite the convenience they offer.

IATA highlighted that AI-powered assistants and automated agents streamline travel service discovery, comparison, and purchase, offering both opportunities and risks. However, the association cautioned that airlines must maintain control over their data, commercial relationships, and service quality. Le Borgne further noted that modern airline retailing, centered around the offers and orders framework, is crucial for this transition, with seven airlines already adopting or implementing the framework, and over 20 others expected to follow by 2027. Technology providers have also pledged more than $1.7 billion to this initiative.

The organization underscored the necessity of integrating financial processes into digital transformation from the outset, rather than treating them as an afterthought. While digital wallets and emerging payment methods offer convenience, Le Borgne cautioned that airlines must thoroughly evaluate their impact on transaction costs, cash flow, and financial risk.

She advocated for incorporating reconciliation, settlement, and revenue accounting into the shift to offers and orders to eliminate operational complexity rather than merely digitizing existing processes.

Furthermore, IATA identified biometrics and digital travel credentials as tools to expedite airport procedures and enhance passenger convenience. However, the association noted that many biometric solutions operate in isolation, hindering a seamless international travel experience. Le Borgne emphasized the importance of standardized biometric solutions for a consistent passenger experience across borders.