01 Nov How Buy Now, Pay Later Grows RASM and Reduces Reliance on Fare Discounts
Sipping a citrusy umbrella drink with your toes toying in sugar-white sands. Far from the big city, summiting a remote jungle mountaintop with your two best friends from childhood. The only thing standing in the way of satiating this social media-fueled wanderlust? Travel costs.
Traditionally, airlines relied on discounting to lure hesitant customers. Potential travelers might keep an eye on prices, waiting to book until the very last minute—or even worse, not book at all. But now, the booming Buy Now, Pay Later (BNPL) trend – expected to grow 10-15x its current volume, topping $1T in annual gross volume by 2025 – has ventured into the travel industry, giving airline revenue managers a shot at expanding Revenue Per Available Seat Mile (RASM) in ways they never knew were possible. The new payment method allows customers to start packing for trips that were once only a pipedream. The payment method is not only fulfilling vacation fantasies, but it’s increasing incremental bookings and average order values for airlines.
Uplift is the leading BNPL provider overcoming price as a barrier for booking travel. Instead of paying the full cost upfront, airlines are partnering with Uplift so travelers can spread the cost of their trip over fixed, monthly payments spanning a three to 24-month term. With BNPL, vacation experiences are now more accessible for travelers, with 39% of Uplift travelers reporting they would not have booked their trip without Uplift at checkout. Whether they’re looking to snag a slice of paradise or longing for a warm welcome home, travelers are booking trips they might have otherwise skipped.
How bite-sized payment plans are the antidote to price discounting
- Boost your average order value: With more payment options on the table, travelers are more willing to pull the trigger on upgraded seating, non-air bundles, and in-flight bonuses. Airlines using BNPL report a 40% increase in AOV.
- Grow RASM faster by simultaneously increasing yield and demand: When you can drive an increase in bookings without dropping the price, you can maintain price structures for longer time periods. This generates a higher yield via increased average order values while also increasing Load Factors through incremental bookings.
- Increase unit profitability: Uplift’s exclusive relationship with UATP provides a lower interchange rate when compared with standard credit card interchange.
- Infuse your revenue management strategy with a targeted non-price lever: Buy Now, Pay Later models add a new variable to the revenue management toolkit, opening new doors on targeted interest-free promotions that virtually eliminate the need for discounting.
With a Buy Now, Pay Later option at checkout, Uplift helps overcome a customer’s indecision to book based on price. Travelers are also more likely to secure additional trip upgrades, increasing wallet share for your airline. With BNPL, you’re able to acquire new customers without discounting ticket prices. Social media has done the legwork of igniting a historically unrivaled thirst for travel. Has your airline adopted the latest payment strategies that are winning over these eager customers?