“For airlines, cashflow is critical,” says William Pershke, Vice President of Global Airline Consulting for Elavon. 

“You need to pay salaries today. You need to pay for fuel today. You need to collect and pay government taxes today… even if the flight is in weeks or months ahead. 

“So, you need to get the money you are due, that you have earned, today,” he adds.

Data is money. Time is money 

So, here, William outlines four best practices you should be following, or questions you should be asking yourself and your payments partner, to make sure you’re being paid what you’re due, when you’re due it. 

Many risk and credit models for airlines rely on the departure date of the ticket. 

Once that date has passed, the risk that the customer will not get their flight is considered to have lapsed - so the funds are safe to release.

The problem is many transactions are processed with an invalid date or without a departure date being provided. 

That means you get less money and you get it later than you should.


Why is it happening? 

While almost all tickets purchased have a departure date, that vital data can drop out at several points of the transaction. 

What can you do about it?

If you can identify where in the process the departure date is dropping out, you can fix the problem so it doesn’t happen again.

 

There are two types of data that, if missing or provided late at settlement, will lead to you paying more.

  1. Airline addenda data 

  2. Authorisation downgrades;

What can you do about it?

You can only fix it if you know it’s happening.  So, contact your PSP, gateway or acquirer and ask for a “qualification of downgrade report” (use those exact words!), particularly for any transactions involving North America.

Beware of the convenient solution.
Sometimes that means it’s costing you more. That may be fine with you, if convenience is what you want more than anything else, but is it worth it? Many providers will give airlines blended pricing, with everything in one (card brand fees, bank interchange fees and processor margins). It’s simpler, but then not as transparent about exactly what you’re paying and to whom.
 

What can you do about it?  

Firstly, ask your provider for a report that shows your pricing breakdown. Then see if your pricing is fair and competitive for your volume and the countries where you’re processing.

 

 

 

 

A number of airlines have not changed their locations or routed their transactions accordingly after Brexit. In some cases, you’ve still got EU cards settled in a UK location or vice versa. Before Brexit, those types of transactions would have been classed as intraregional, now they’re interregional – so you’ll be paying way more.
 

What can you do about it?

Review the routing of your transactions and locations post-Brexit.  Not all payment providers are able to support this re-routing if they don’t have cross-border capabilities, so check yours can.

It’s worth remembering that while payments may be settled at the end of a process, their success can be impacted by problems at any stage of that process. So, it’s important to have a full and clear overview of your payments data at every stage.

21 December 2022
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