Marc O’Fathaigh, Klarna UK and Ireland country manager, explains why airlines need to offer customers flexibility in the ways they pay or risk losing out in a competitive market

The growing and diversifying travel market is exposing an overlooked weakness for airlines, where they risk potentially losing both loyalty and revenue: the checkout page.

Airlines have long recognised how and where distribution drives revenue. That’s certainly nothing new.

However, customers have grown increasingly used to flexible payments allowing them to spread the cost in everyday spending in recent years.

The result? That same expectation is increasingly being applied to travel and airline tickets.

In a similar vein, as platforms and customer segments continue to expand airlines are being charged with reconciling payments across an increasingly diverse array of channels.

Channels which are often determined by geography, age, and digital preference. Alternative payment methods, digital wallets and mobile-first solutions are all now firmly present at the checkout.

Failing to offer preferred local payment methods is no longer a minor inconvenience for customers. Critically it can impact their experience and in turn an airline’s cashflow and revenue.

For airlines how does that translate to day-to-day on the ground and in the air operations?

As with any revolution, those that do keep pace with customer preferences, platforms and channels can unlock revenue, enhance the customer experience, and reduce cost.

Those that fail to adapt risk rising fraud exposure, lost conversions and a shrinking share of an increasingly competitive marketplace.

Likewise, whilst more choice and payment options available means operators can cast their customer net wider to improve conversions, it can also make operations more complex.

It is no longer a case of balancing the books, it also means balancing a growing tech stack of payment methods, currencies, and partners without compromising efficiency.

That said, carriers that move first can turn that gap into an opportunity and for operators and customers alike, buy-now-pay-later (BNPL) has been steadily establishing itself as one of the most significant shifts in airline payment trends in recent times.

Klarna data shows that more than a third of travellers are more likely to book when offered a buy-now-pay-later option with some airlines reporting as much as a 65% boost in order value.

For those not already using BNPL, three quarters of consumers say travel is their top category for future use.

Looking at BNPL through a wider lens, in 2024 in the UK alone nearly 14% of online Christmas-period spending was via BNPL, or £3.6 billion*. And that figure is growing daily.

For costlier family holidays or premium options, BNPL financing options can provide further flexibility. Customers are able to spread larger fares across monthly payments.

For airlines, BNPL providers typically assume credit risk and pay airlines upfront, enabling carriers to capture bookings they might otherwise lose while protecting cash flow.

However, it goes without saying that as digital payments expand and diversify, so too does the risk of fraud.

Reassuringly for airline operators, from an external perspective UK regulators are preparing to bring the BNPL sector under formal oversight.

Internally, many airline operators are investing in AI-driven fraud protection and real-time transaction monitoring, to cite a couple of examples, in order to mitigate against 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) which can help build trust and reduce cart abandonment;
• offer customers the opportunity to pay in their preferred currency which can support transparency and enable the airline to reclaim any potential FX margin;
• integrate loyalty schemes across payments to further enhance the guest experience and engagement both for the current and future sales.

It is fair to say payments now more than ever before have a pivotal role in determining who truly capitalises on modern airline retailing.

Both the airline and wider travel sector are already firmly in their digital commerce era, however now payment innovation is setting the direction for the customer journey, customer loyalty and, critically, conversions.

For carriers weighing how to keep pace with changing expectations, payment flexibility is no longer a secondary consideration, it is fast becoming part of the offer itself.

And for an industry built on precision and timing, the message is simple: the runway is clear, but only those ready to act will be cleared for take-off.

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Klarna is featured on this year’s TravelTech Show conference programme as part of the session The payments revolution in travel

TravelTech Show takes place on June 24-26 at Excel in London.

It is free to attend for travel technology specialists involved in or responsible for the technology within their travel business and consultants who help travel businesses select technology solutions. Suppliers must purchase a visitor pass if they wish to attend. TravelTech Show has the final right to accept or deny any registration.

To register please visit: traveltech-show.com/register

*Source: Adobe Digital Insights Report – July 2025: Record £25.8 billion spent online during the UK holiday season