Despite strong profit projections in the past year, a new report from CellPoint Mobile claims that airlines are not taking full advantage of mobile solutions for their ecommerce infrastructures.

The findings, part of a monthly industry brief from the company called Mobile Commerce and Payment Innovation Across the Airline Sector, indicate that despite surges in mobile solutions in other sectors, the airline industry still has much ground to gain. The report claims that airlines that embrace mobile commerce strategies and payment solutions benefit by establishing permanent, internal links to currently untapped direct-channel and ancillary sales, and they create a companywide mentality that aligns more closely with their passengers’ mobile-centric behaviors.

“Like many companies, airlines are doing business with millions of passengers in a market that is undergoing rapid change, and change is never easy,” said Kristian Gjerding, CEO of CellPoint Mobile. “Airlines typically face same kinds of internal challenges – budget constraints around new initiatives, vast amounts of data that must be connected to this rapidly emerging mobile environment, and legacy technology infrastructures that require hard-to-find internal resources and expertise.

“Databases and technologies built for plastic cards must be modernized and updated in real time for transactions and payments that increasingly will take place on smartphones, tablets and wearable devices,” he said. “We recommend that airlines begin adopting a retail or ‘selling’ mentality so they can envision mobile payments as a way to access new revenue streams from passengers as they travel.

“Today’s consumers already rely on their smartphones for everyday interactions with their favorite retailers, stores and restaurants, for example, and they increasingly expect the same kind of built-in, mobile capabilities as they travel – whether booking or rebooking, purchasing an item on board or booking a post-destination theater ticket.”

Airlines on mobile
The airline industry would be wise to heed the report’s warnings, especially considering eMarketer’s prediction that global digital travel outlays will reach $817 billion by 2020. Travelers are increasingly demanding reliable connectivity that gives them more control over their travel experience and expands their options for on-the-go travel purchases.

The report claims that many airlines suffer from an absence of e-commerce as a core element of corporate business, marketing and sales strategy and siloed operations and lack of ownership for mobile commerce and mobile payments across multiple touchpoints.

Many airlines also fail to deploy secure and efficient payment technologies that build revenue, while reducing the need for travelers to repeatedly expose confidential financial information.

Mobile implementation
Once airlines establish a strong mobile presence to host transactions, the report claims that the benefits to the brand arrive both in the short and long terms.

According to CellPoint Mobile, within the first month of implementation, 20 percent of airline revenues generally stream in from the mobile environment.

And 12 months after implementation and passenger use, the mobile channel has the potential to emerge as the airline’s most important and financially successful sales channel, supporting more than 50 percent of ticket sales and nearly 30 percent of ancillary sales. In addition, overall airline revenues are seen to increase.

A few airlines are ahead of the curve in terms of mobile innovation. One is KLM Dutch Royal Airlines, which took a leap into customer service innovation by running a pilot program, during which it determined how artificial intelligence technology fares in handling customer service requests on social media (see story).

And United Airlines is launching a suite of iOS mobile applications for use by its employees to improve their ability to track customer information and improve the customer experience (see story).

“If passengers can pay for travel-related services easily, securely and quickly from their smartphones, airlines can begin to access more direct-channel and ancillary revenues from the mobile environment,” Mr. Gjerding said. “When the promise of more revenues and greater profitability becomes more apparent, and as they grapple with the reality of some countries’ plans for ‘cashless economies,’ airlines will begin to move mobile payments and mobile commerce strategies higher up on the priority list.

“It’s imperative, in fact, that they do.”