Air travel One installment payment at a time
Buy now and soar through friendly skies – but pay over time.
Buy Now, Pay Later (BNPL) options are finding a large place in a large number of vertical markets. Breaking up larger ticket purchases into smaller increments can be helpful in closing the sale in a way that gives recurring cash flow and visibility to the merchant.
One of the latest examples is that of Delta Air Lines. The company will offer BNPL to its travelers as a payment option for tickets over $100. The BNPL feature, available to American Express cardholders in the United States, will leverage American Express’ Plan It options. The feature will be integrated into the Fly Delta app starting this spring.
Read more: Delta launches BNPL offering with AmEx
Consumers can split purchases into equal monthly installments for a flat fee.
Other airlines too
These are the mechanics of the deal. Delta is just one of the latest carriers to adopt BNPL.
American Airlines has already entered into a pact with Affirm to offer installments.
See more : Affirm Teams with American Airlines to Offer BNPL Option to Travelers
And in a (regional) rollout that appears more limited, earlier this year Uplift, a BNPL solution, said it was expanding an onsite partnership with Southwest Airlines to offer payment options for travel to Hawaii.
Read more: BNPL Firm Uplift partners with Southwest Airlines for Hawaiian travel
The airline use case makes sense, as travel is among the most important tickets consumers spend their money on. A quick scan of the Transportation Bureau’s website reveals that the average domestic fare (as listed by city of origin) in the third quarter of last year ranged well into the $300 range.
Data from PYMNTS shows that consumers are spending more on travel-related activities. The average amount spent by consumers on travel rose from $381 in December to $507 in January. Overall, consumers spent $23.4 billion on travel purchases in January.
See more : COVID-19 didn’t get in the way of Americans’ travel plans in January
For airlines, offering BNPL can be a way to help consumers click the buy button, as they also struggle with inflation. They may balk at the price of tickets at first sight, especially when juggling other fixed expenses (mortgage payments or credit card debt).
This tailwind may be particularly welcome in air travel, where as an industry the overall business travel and passenger travel recovery rate is, in January and February, for Delta at least, about 70 % of pre-pandemic levels, where it was 80%. BNPL may be enough to provide an additional tailwind to earnings momentum.
Read more: Airline earnings show continued gains in cargo business and rebound in business travel
BNPL, as we have seen in previous research, is increasingly being used as a budgeting tool across demographics. This is especially true for what we at PYMNTS have defined as “worry-free” consumers who have sought alternatives to traditional credit.
See more : BNPL user personas proving payouts have value beyond instant gratification
NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICE IN THE DIGITAL ENVIRONMENT
On: Forty-two percent of US consumers are more likely to open accounts with financial institutions that facilitate automatic sharing of their bank details upon sign-up. The PYMNTS study Account opening and loan management in the digital environmentsurveyed 2,300 consumers to explore how FIs can leverage open banking to engage customers and create a better account opening experience.
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