IATA WFS, September 25

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Issue 01: Wednesday 25 September 2019

Airlines.

6th World Financial Symposium

SPONSORED BY

September 25 - September 26, 2019 | Miami, USA

Welcome to Miami!

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Aleks Popovich

ISSUE 01

“Shaping a Sustainable Future, Together: Airlines—IATA— Partners” is the theme of our 6th World Financial Symposium theme this week in Miami.

A sustainable future certainly means financial health, but it also means more than that. Environmental sustainability is a major challenge for our industry. At this week’s World Financial Symposium (WFS), thought leaders will highlight how sustainability and leadership go hand in hand.

We’ll debate how financial and environmental sustainability can be implemented as integral elements of IATA’s renewed strategy for the industry, and we will explore what should be our

contribution, as a financial community of airlines, IATA and partners.

So, here’s what’s in store for you at this week’s packed WFS agenda. Our opening plenary will set the stage for our WFS theme. Then two specialized tracks will focus on Payment & Fraud Prevention as well as Financial Strategy & Risk, addressing how partnerships can help reduce payment costs and prevent fraud, as well as providing tools to marry risk prevention, predictive analytics, and flexibility, in an environment that increasingly is digital and volatile.

Eight different “Meet the Experts” sessions will enable you to have a direct line with leading experts in different areas: from Route Profitability to

Currency Repatriation, and many more.

Finally, our closing plenary will focus on how sustainability will be driven through innovation and partnerships throughout the industry. Consistent with our focus on the Environment at this year’s WFS, this newsletter is only available digitally via the WFS event app.

Working together as Airlines, IATA, and Partners: let’s build a safe, secure, and sustainable air transport industry. I look forward to seeing you here and wish you a successful, fulfilling and enjoyable 6th World Financial Symposium!

Aleks Popovich, IATA Senior Vice President, Financial and Distribution Services airlines.iata.org

Issue 01: Wednesday 25 September 2019

“There is nothing worse than seeing your efforts to convince the client to buy negated because you don’t support the payment instrument she expects to use” Christophe Kato, IATA Head, Industry Payment Services

Untangling the payment jungle

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European regulation demands that all electronic payments are secure. In effect, this means chip and PIN for face-to-face, card and cardholder present transactions, and the 3D Secure protocol for Internet sales.

The September 2019 deadline for this regulation has been extended for 18 months, however, as the banking and retail industries were not fully prepared for the enormous changes this regulation represents.

“Airlines, for example, face special challenges for all the transactions made in shared industry infrastructures, such as travel agencies and at the airport positions,” explains Christophe Kato, IATA’s Head, Industry Payment Services.

Though workstreams are in place to address this issue, the growing cost of payment acceptance and the profusion of new payment instruments being developed are still a concern.

For each development, airlines must evaluate if it makes sense for their sales.

Card, the dominant payment instrument today, airlines.iata.org

Payment habits are changing and vary according to customer segment. The one-size-fitsall approach is no longer enough

is more or less standardized globally. But most new payment instruments are local, developed for each individual country.

Bank transfer illustrates the point. On the face of it, the principle is the same everywhere but, actually, standards are developed each time by the national banking community. As a result, accepting instant bank transfers across the world means working with a profusion of local bank accounts and protocols. Payment providers are exploring how to support global merchants, including collecting on their behalf.

Perhaps the biggest change though is payment processes moving from the technical arena to become a differentiator in the highly competitive aviation industry.

“Nowadays, we understand that payment is the final part of the shopping process and that a comprehensive distribution strategy must encompass the payment part,” says Kato. “There is nothing worse than seeing your efforts to convince the client to buy negated because you don’t support the payment instrument she expects to use, or to suffer a decline in sales because you have not optimized your acceptance process.”

Payment habits are changing and vary according to customer segment. The one-size-fits-all approach is no longer enough. It is also the case that payment instruments must match the diversity of sales channels. Mobile users expect a payment experience optimized for mobile devices. E-wallets work well on this channel as few people are prepared to enter card and other personal details on the small screen of a phone.

The financing of the purchase is another method of potential differentiation that is gaining traction. Extended payment plans may become part of airline strategies in future.

Wednesday 25 September 2019: Issue 01

The HIPO Family is growing!

Under the leadership of the Industry Financial Advisory Council, the High Performing Organizations (HIPO) Working Group has exciting news to share, starting with the launch of the IATA Airline Finance Professionals LinkedIn community.

This group is a space for airline financial professionals to share insights, discuss industry challenges and learn about best practices for airline financial management. Its aim is also to support airlines in their journey to becoming HIPOs. You are invited to join at bit.ly/iata-community.

In addition, the IATA Finance Academy has opened two new courses for registration: Airline Financial Risk Management (launching in October) and Data Science and Decision Support (launching in November).

Airline Financial Risk Management is a joint IATA/ERAU (Embry-Riddle Aeronautical University) course that will provide you with a

deeper understanding of the key economic and financial risks to which airlines are exposed.

It will impart how each risk affects the business, both in terms of direction and magnitude. Types of risks covered in depth in this course include: fuel prices, interest rates, inflation, and credit.

The Data Science and Decision Support course introduces participants to applied data science and machine learning practices in the aviation industry, with a focus on airline finance use cases.

It will enable them to effectively identify and answer key business questions through hands-on training with BI tools. They will learn how to analyze and interpret multiple data visualizations to optimize the decision-making process.

You will also learn how to implement data analytics for better compliance and control, strategic risk, and improved overall data-driven financial management. Visit the HIPO booth in the exhibition area to get the latest information.

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New travel payments white paper Historically, payment has not been seen as a high priority by the airline industry.

Long considered a back-office cost center function, it has recently taken on new importance as a potential contributor to improving the customer retail experience.

Furthermore, payment costs in the airline industry are significant; credit card interchange fees alone are averaging around US $8 billion per year according to one estimate.

New technologies are changing the way consumers pay for purchases while giving companies more control over payments and air travel is no exception. Airlines see the promise, and are aware to lesser or greater extents of the challenge of not addressing these changes. But is it an industry priority? Should it be?

Learn more about this rapidly transforming industry in IATA’s new Travel Payments White Paper, available for free download here. airlines.iata.org

Issue 01: Wednesday 25 September 2019

WFS Welcome Reception

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Wednesday 25 September 2019: Issue 01

Sponsored by

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Issue 01: Wednesday 25 September 2019

US $7 billion

Airlines pay approximately US $7 billion a year to collect payment for their sales.

Transforming to prevent fraud New payment services bring new challenges in fraud prevention.

Alternative ways of paying for an airline ticket or other aviation products promise greater convenience for travelers and lower costs for the aviation value chain. But it will be important to ensure the transactions are as secure as possible to prevent the industry losing out to fraud.

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Fraud is estimated to cost airlines close to US $1 billion per year.

“There is a very thin line separating these opportunities from the threats that are and will continue being out there,” says Anca Dolocan, Portfolio Manager, Card and Fraud Services. “The alternative forms of payment are the future of payment, but technologies such as Blockchain and QR codes are the future of fraud prevention.”

The digital transformation of the industry also promises to remedy problems with existing fraud, particularly card payments. “Card not present” fraud—where the buyer does not physically present a card for inspection—is the biggest problem.

IATA runs a series of local, regional, and global initiatives and programs to help airlines share their knowledge and best practices among a community of fraud prevention investigators. It also partners with national and international crime units and law enforcement authorities, such as Europol, Interpol, and the United Nations Office on Drugs and Crime and additionally contributes to the Aviation Information Sharing and Analysis Center (ISAC), a forum for security information sharing across the aviation sector.

“IATA’s objective is not only to help the travel industry get around the complexities of fraud management but also to lobby with international card schemes and regulators to raise awareness of this sensitive area and encourage them to adopt the best measures to enable a sustainable environment for travel business growth,” Dolocan suggests.

Ensuring that the industry correctly manages risk in connection with fraud will not be easy. The passenger experience, which includes the convenience of new forms of payment, cannot be compromised. Fortunately, new technologies and collaboration within and outside the aviation value chain promise a solution.

Advertising Feature: Hitit

Analyze Data. Take Action.

Generate Revenue.

The airline business planning process can be a challenging task, but Hitit’s solution aims to change all that by offering a user-friendly process that keeps airlines one step ahead.

Hitit presents “CRANE BPI” Hitit, one of the leading IT providers, continues to enhance its product suite with various options by reevaluating its function beyond producing classical passenger service system (PSS) solutions. Hitit knows that inventories and issuing tickets are not the key points of differentiation for airlines whose aims are to be one step ahead of their competitors.

Hitit engineers have been working to create a pioneering reporting tool. Our solution is the most comprehensive and compact information resource throughout the entire airline industry, and as such we were awarded Best Commercial Airline Reporting System at the Aviation, Aerospace and Defence Awards in 2017.

Find out the main industry KPIs, check the route profitability Airlines are not just realizing the potential of the data they have; they also understand that Crane BPI gives them a priceless opportunity to take control of their data and leverage how

they use it to generate revenue. We continue to receive significant successful feedback from our partner airlines.

Crane BPI has helped airlines to improve their capability substantially by monitoring and analyzing regular information about an airline’s performance in terms of revenue, load factor, yield, sales channels and ancillaries, both historically and for the future. Crane BPI also provides the main airline industry KPI calculations, along with more detailed analytic reports and calculates the route profitability by integrating with all global distribution systems.

In addition, airlines can be provided with a daily checklist, based on pre-defined criteria, to be processed by revenue management,

inventory, and pricing teams for critical flights.

With user-friendly graphical interfaces Crane BPI reduces the need for experienced staff and saves time both for the users and management through compact and detailed tables. The tool also enables efficient management of the inventory through daily alerts based on user defined criteria. It is designed based on the needs of both senior and middle management, as well as operational teams.

For more information on Hitit’s Crane BPI reporting tool, visit https://crane. aero/solutions-services/accounting/ business-performance-index

Issue 01: Wednesday 25 September 2019

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