A recent article in the Sunday Times (South Africa) quotes IATA as saying that the global airline industry is set to post losses of $5.2b this year and $4.1b in 2009 as higher oil prices take a toll. "The difficult business environment is expected to continue" said IATA Director General "The situation remains bleak".
While African airlines are battling to cope with the increasing cost of petrol and general inflationary costs of doing business, the rapidly growing developments in payment solutions are providing for welcome increases in revenue and driving down costs. All in good time for the 2010 World Cup Soccer.
This year, PayGate was approved as a service provider to SITA as a result of their unique combination of payment solutions ideally suited to the African processing environment. Over the past ten years, the PayGate team has been observing the poor performance of airline processing service providers. Through working with certain airlines trading successfully in the African environment, such as Air Namibia, American Airlines, Iberia and others, PayGate has put together an ideal processing strategy for revenue growth and loss reduction to increase the profitability of its airlines.
To broaden the reach of airlines, PayGate has introduced "more ways to pay" so that airlines in Africa can maximise the conversion of enquiries to sales. PayGate has lined up "more ways to pay" such as processing and denomination in the major foreign currencies, soon payment can be made online in a number of African country local currencies, and a number of other cash to credit online payment options unique to the local processing environment.
For many African airlines it has been difficult to get an international merchant facility - PayGate is now assisting African airlines with setting up these facilities in Africa or Europe depending on the profile of the airline and providing them with merchant solutions that were not possible in the past. The online booking and payment solution provided by PayGate and the booking engine providers is giving the African airlines immediate access to the international market who can book and pay at the same time with minimal fuss.
The above solutions are providing African airlines with the increased turnover at a fraction of the increased marginal cost which is improving their profitability considerably.
To drive down their losses and costs, PayGate's system has provided the ability to process online at very low cost compared to the laborious old manual system. All airlines are suffering considerable losses as a result of chargebacks and fraudulent transactions - two airlines currently in dialogue with PayGate on processing and risk reduction are losing between R500,000 and R3million a month.
Through a combination of using 3D Secure (which is not a silver bullet) and fraud and risk processing, PayGate has cut chargebacks significantly, also at a fraction of the cost of the losses. The spinoff benefit is that South African and African airlines don't fly with empty seats from fraudulent bookings.
Another major benefit of cost reduction is that African airlines can now process and hold their resources in optimal currencies to pay their bills, as many of them are paying in Euros, Pounds and Dollars for their fuel and other supplies. There is a huge loss in processing to local currency and then converting back to international currency for payment.
A final spinoff of processing in international currencies is that African airlines can quote prices in foreign currencies instead of their fluctuating home currency and the flyer will be charged the correct amount on their credit card statement. There have been problems in the past in the cost of conversion and the flyer complaining about the incorrect amount on his or her statement as a result of conversion.
To improve your airline payment solutions and profitability click the contact buttons above to speak to a PayGate Airline Payment Solutions Expert. Thank you
