Marc O’Fathaigh, country manager at Klarna UK and Ireland, explains why airlines must offer customers flexibility in how they pay or risk losing out in a competitive market
The growing and diversified travel market is exposing an overlooked weakness for airlines, where they risk losing both loyalty and revenue: the payment page.
Airlines have long recognized how and where distribution generates revenue. That’s certainly nothing new.
However, in recent years customers have become increasingly accustomed to flexible payments that allow them to spread the cost over daily spending.
The result? That same expectation increasingly applies to travel and airline tickets.
Similarly, as platforms and customer segments continue to expand, airlines must reconcile payments across an increasingly diverse range of channels.
Channels that are often determined by geography, age and digital preference. Alternative payment methods, digital wallets and mobile-first solutions are now firmly present at checkouts.
Not offering preferred local payment methods is no longer a minor inconvenience for customers. It can critically impact your experience and, in turn, an airline’s cash flow and revenue.
For airlines, how does that translate into daily operations on the ground and in the air?
As with any revolution, those that keep pace with customer preferences, platforms and channels can generate revenue, improve customer experience and reduce costs.
Those who fail to adapt risk increased exposure to fraud, lost conversions, and declining participation in an increasingly competitive market.
Likewise, while greater variety and payment options available means operators can expand their customer network to improve conversions, it can also make operations more complex.
It’s no longer about balancing the books, it also means balancing a growing technology stack of payment methods, currencies and partners without compromising efficiency.
That said, operators who act first can turn that gap into an opportunity and, for both operators and customers, buy now, pay later (BNPL) has been steadily establishing itself as one of the most significant changes in airline payment trends in recent times.
Klarna data shows that more than a third of travelers are more likely to book when offered the option to buy now, pay later, with some airlines reporting an increase of up to 65% in order value.
For those not yet using BNPL, three-quarters of consumers say travel is their top category for future use.
Looking at BNPL from a broader perspective, in 2024, in the UK alone, almost 14% of online spending over the Christmas period was via BNPL, or £3.6 billion*. And that number grows day by day.
For more expensive family holidays or premium options, BNPL financing options can provide greater flexibility. Customers can spread higher rates across monthly payments.
For airlines, BNPL providers typically take on the credit risk and pay airlines up front, allowing them to capture bookings they might otherwise lose while protecting cash flow.
However, it goes without saying that as digital payments expand and diversify, so does the risk of fraud.
What is reassuring for airline operators is that, from an external perspective, UK regulators are preparing to bring the BNPL sector under formal supervision.
Internally, many airline operators are investing in AI-based fraud protection and real-time transaction monitoring, to name a couple of examples, to mitigate fraud risk.
For airlines reviewing their payment options, there are a number of key pillars to keep in mind:
- consider offering local alternative payment methods (APMs) that can help build trust and reduce cart abandonment;
- offer customers the opportunity to pay in their preferred currency, which can support transparency and allow the airline to claim any potential exchange margin;
- Integrate loyalty schemes into all checkouts to further improve guest experience and engagement for both current and future sales.
It’s fair to say that payments now more than ever play a critical role in determining who truly capitalizes on modern airline retail sales.
Both the airline and the broader travel sector are already firmly in their digital commerce era; However, innovation in payments is now shaping the direction of the customer journey, loyalty and, crucially, conversions.
For operators assessing how to keep up with changing expectations, payment flexibility is no longer a secondary consideration but is quickly becoming part of the offering itself.
And for an industry built on precision and timing, the message is simple: The runway is clear, but only those who are ready to act will be authorized to take off.
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Klarna appears in this year’s edition Travel Technology Fair conference program as part of the session The travel payments revolution
Travel Technology Fair will take place June 24-26 at Excel in London.
Assistance is free for travel technology specialists involved in or responsible for technology within their travel business and for consultants who help travel companies select technology solutions. Vendors must purchase a visitor pass if they wish to attend. TravelTech Show has the final right to accept or reject any registration.
To register please visit: traveltech-show.com/register
*Source: Adobe Digital Insights Report – July 2025: Record £25.8 billion spent online during UK Christmas season
