eWallets for Inflight Purchases

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December 17, 2018

eWallets for Inflight Purchases

There are more than twenty three thousand commercial aircraft in the world. More than half of these have at least one form of IFE system. Most of the old overhead monitor IFE systems are being phased out and majority of new planes are still coming out with personal screens behind each seat.

Irrespective of providing vendors, each screen comes with a credit card reader to enable passengers perform inflight purchases.

Many narrow body aircraft – especially the ones owned by smaller airlines don’t have inbuilt IFE systems. They are exploring BYOD (Bring Your Own Device) concept for passengers to access entertainment option inflight from their own personal devices. The devices can either access media directly from internet (Using services like Gogo, ViaSat etc) or from inflight servers with a large collection of media. If internet service is available, passengers can do payments for their purchases using normal web-based or app-based interfaces.

Everyone recognizes that a huge investment is involved for installing in-seat monitors or for providing internet onboard. And hence it was understood many years back the entertainment systems should be converted into a revenue generating systems by direct or indirect means. Direct means being sales of food, movies or duty free onboard. And indirectly by generating revenue using advertising.

But some of the recent changes in regulations in credit card processing are threatening to change the way this industry works. Globally credit cards with chip and PIN are being made mandatory. And in case of Europe, biometrics might also be made compulsory in near future.

Given the time and cost it takes to design new systems and getting them certified for airworthiness, it is almost impossible for any airline to keep up with the new regulations. As soon as the simple magnetic card swipe systems are outdated, all the fixed seat systems would go back to just being expensive dead weight for the airlines without generating any revenue. Many big airlines go thru a standard lifecycle of upgrading the systems, but that’s not going to be so easy for small carriers.

They will soon have to look at options that wouldn’t need a card swipe and still be able to use the existing infrastructure for transactions. The most logical option is to use eWallets. Passengers can load their wallets before boarding the flight – most probably while booking tickets – and use these wallets for inflight purchases.

This is clearly not a new concept and has been in place from many years. It has been recently popularized with the advent of all app-based services such as Uber.

Apart from ease of use, eWallets have many other advantages. It is one of the ways to retain a customer. A user looking to book a cab might have more than one booking apps in her phone, but she would most probably pick the app where the eWallet already has some balance left to use. It also helps in making recurring payments much easier. And eWallets are a great way for companies to incentivize users in the form of credits and cashbacks. It would make a great sense for airlines to use it in conjunction with frequent flyer programs, the sole objective of those are to create loyalty.

Have a look at this use case that could evolve out of such implementation -

Steve, a frequent flyer with a gold status has added some items to the cart using IFE system and has entered his PNR number to complete the transaction. The systems detects that his eWallet doesn’t have sufficient balance, but also see that it’s a frequent flyer account. The system displays a message to the passenger informing that being a gold status holder a credit is being extended and transaction is processed.

Simple AI at this level would definitely win more loyalty for the airlines.