As travel buyers continue to grapple with unused flight credits lingering from the early days of the pandemic, UATP has played a key role in developing a platform to help buyers and airlines manage those credits. UATP president, CEO and chairman Ralph Kaiser recently spoke with BTN executive editor Michael B. Baker to provide an update on unused ticket management as well as the growing use of alternative payment methods and UATP’s newly emerging role as a payment service provider for airlines.
BTN: What are you seeing in terms of volume now?
Ralph Kaiser: We had a record year in 2019, and then the pandemic crushed everybody, but our alternative payment processing business is already back ahead of our record year in 2019. It’s the resilience of the leisure traveler even during Covid that’s been remarkable. People made calculated decisions to travel where they could and took advantage of good deals, so that business has been doing wonderfully well, the business where we process an alternative payment brand over our network for the airline, so to the customer it looks like Apple Pay or PayPal or Uplift or Alipay, but to that brand, they’re running it to us. To the airline, it looks like a UATP payment. That’s really in the leisure market, so we’ve seen the leisure traveler keep the hope alive that travel will return to normal.
BTN: Could there ever be any corporate implications for these alternative payment options?
Kaiser: We’ve always liked our business lines because there was really no crossover, so no chance of cannibalization. Can I say that there’s no small business using PayPal as their main form of payment for travel? No, but it’s not that likely. I could see businesses trying to get into some of the fly-now, pay-later stuff if they’re emerging from a rough period. I wouldn’t rule out that the alternative payment brands can get into the corporate arena. There could be some shakeup there too, with some of the blockchain-type technologies that may disintermediate some of the traditional players, but that works better on a larger scale, so it might not be suited for small businesses.
BTN: How about management of unused tickets?
Kaiser: We created an industry platform for refunds and travel credits. We know it’s more travel credits, and we know it was a little controversial—airlines were not pushing cash back out the door but giving travelers credits—but no one had a really good system to do this. Because of where we sit in the industry, how we are embedded in everything across the clearinghouses, we stood up a platform where airlines can put any credit from any form of payment on a UATP account, and it’s a virtual account that will be used as a pre-paid, charge-down account for travelers. It’s been very successful and has taken a lot of pressure of the airlines for managing those refunds. We don’t set the policy. Everyone of course wants their money back, but depending on the airline policy, they’re allowed to give a credit and we’re making it easier for both the airlines and the traveler.
BTN: Are the volumes in those accounts still considerable, or have they started to subside?
Kaiser: There’s still a considerable amount of volume to be charged off in the refund markets. We’re not seeing the new volume because there are existing credits that have to be used first. Anecdotally for us as a company, we at UATP have a lot of travel credits still, and we’re aggressive travelers because of the nature of our business and customer base. We won’t be buying a lot of new air for a while until we burn off these credits, and I guess that’s a little difficult for airlines to make that recovery, but we’re starting to see forward bookings improving.
BTN: What other projects have been in the works at UATP?
Kaiser: Our third line of business now is our merchant services business, which is very similar to a [payment service provider]-type function. Over time, we have seen the airlines needing better services and better pricing for processing their payments, not just UATP payments and alternative payments but all payments. Over the years, our airline members have asked us if we can help out with that, and over the last couple of years, we’ve developed a case and the technology and partnerships to launch, so now we’re going to be in the marketplace as a payment service provider. We’re still not going to do the settlement or the underwriting and be an acquirer, but we are setting up some proprietary ways that others can do that with our assistance. We’re trying to create a new model, sort of change the paradigm, for how airlines are viewed and treated by payment service providers and acquirers globally.
A big airline in its home market can get a very favorable deal—you would think, though some might argue they still can’t—but in secondary and tertiary markets and markets that aren’t their home countries, sometimes they don’t have good service or have good pricing. Likewise, for smaller carriers, they don’t have bargaining power, so they get a take-it-or-leave-it approach and get very unfavorable pricing, and underwriting can be onerous with lots of extended holdbacks and things like that. We’re trying to have a new set of underwriters and various partners. We’re looking at the airlines in a more holistic way, in what are the best routes, what’s the time from booking to flight and depending on the nature of the ticket, a business-class ticket is often flown within three weeks of booking whereas a leisure traveler may book three months ahead.
It’s easy to paint with a broad brush, and I think all of us who work in the airline industry or with the airlines are tired of hearing about airlines being risky. They’ve been pretty resilient during the pandemic, and there’s been a lot of government and private support for the airlines, so we think we’re onto something.
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