The number of airlines offering on-board mobile payments will increase from 5 percent to 36 percent in the next two years, according to a new report from WorldPay.

The report reveals that airlines will increase their focus on mobile as both a distribution channel and a payment method.  Some of the ways that airlines will extend their existing mobile services over the next couple of years include offering ancillary purchases such as seat upgrades, booking management, onward travel and in-flight purchases via mobile phones.

“To remain competitive, airlines need to align their payment offerings with customer expectations,” said Mike Parkinson, vice president of airlines at WorldPay, London, Britain.  “The opportunities and benefits of new payment and distribution channels such as mobile are clear, but these bring specific challenges.

“Airlines can be notoriously siloed,” he said. “However for mobile and other new payment technologies to be successful, all departments – finance, operations, loyalty, ecommerce and now new mobile/innovation teams — ill be required to align and work closely with a common goal.”

Competitive advantage
Airlines are looking to align their payment offerings with customer expectations in order to gain a competitive advantage, according to the report, “Alternative Payment and Distribution Landscape: Airline Distribution Channels.”

WorldPay surveyed 68 global carriers and asked them about how mobile and social are impacting their businesses.

Key findings include that 50 percent see mobile payments as a way to keep up with competitors, and 45 percent see them as a way to increase revenues.

Additionally, 83 percent of airlines believe improvement and deployment of new payment technology is a major business priority. Also, 18 percent of airlines plan to accept ewallets on-board by 2016

In addition to providing benefits for passengers, airlines are interested in mobile payments for their ability to address processes such as data submission and handling.

Social media
In terms of social media, many airlines already have a presence on sites such as Facebook, LinkedIn and Twitter.

The report found that over the next two years, airlines will increase usage on these sites and extend their reach onto other social networks. For example, 40 percent plan to be active on Google+ in the next 12 months.

Social media is also seen as a high potential sales channel, with nearly a third of airlines planning to enable sales via social media in the next 12 months.

With in-flight connectivity a priority for passengers, airlines are looking to expand the on-board payment methods they offer and increase services such as in-flight Internet and mobile.

Self-service kiosks
Cards are still the most popular payment method used by passengers to pay for goods and services on-board, but alternative payment methods are growing in popularity.

At the same time that airlines are investing more in mobile payments and services, investment levels in self-service kiosks is waning.

The findings include that 40 percent of airlines believe self-service kiosks will be less important in the future, and only 17 percent of airlines are investing more in developing kiosk services compared to 29 percent who are investing more in mobile services.

“The most surprising finding was the speed of change in the industry and the overwhelming intent by airlines to both invest in and use mobile services and payments,” Mr. Parkinson said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York