Emirates has launched Emirates Pay in the UK and Germany.
It is a payment method in which Emirates passengers can buy their tickets without using a credit or debit card.
Passengers buying tickets through Emirates Pay will save the airline money compared to the cost of fees it must pay credit and debit card companies.
These fees typically range between 1 per cent and 3 per cent.
Over the years all airlines have gradually reduced the cost of distribution as they seek to become more competitive.
Not so long ago the standard IATA commission paid to travel agents was between 8 and 10 per cent per ticket.
Non-IATA airlines (or those IATA airlines lacking the best reputations for inflight service) would pay agents much more. The agents would then discount the ticket price to the customer.
Nowadays in Europe agencies receive little if any commission, although the situation may differ in other areas of the world.
Quoted in the FT (paywall) Michael Doersam, Emirates’ chief financial officer said, “For us that [saving] is a huge difference.”
He added that fees to payment providers were one of the biggest components of its [Emirates] cost of sales.”
Emirates Pay will not suit everyone. Some consumers prefer to use different airlines depending on their itinerary. In any case for residents of Europe, Emirates is of little use when flying transatlantic (those two fifth-freedom routes to New York excepted).
One can understand Emirates’ concern when roughly two-thirds of its revenue comes via the card firms.
Trade body IATA reckons that, pre-Covid, airlines in general were paying the card providers some US$8 billion a year in processing fees.
In summary:
- Emirates Pay is an alternative method for travellers to buy tickets with the cost directly taken from their bank accounts
- It is based on real time payments and Open Banking / Request to pay schemes
- For airlines, the new payment solution offers savings plus faster settlement
- For consumers the new payments software addresses the demand for more secure payment options
