Airlines pay more, earn less

Airlines spend an average of $5 processing a passenger’s payment, yet expect to earn just $4.50 in net profit per passenger in 2026. African airlines are forecast to earn only $0.40 per passenger, leaving them with even narrower margins as the cost of collecting payments continues to rise.

According to new figures released by the International Air Transport Association (IATA), airlines worldwide spent $24.5-billion processing $1.05-trillion in sales during 2025. The cost of handling payments has risen faster than the value of the sales themselves, adding another financial burden to an industry already operating on narrow margins.

Between 2023 and 2025, total payment costs increased by 10.4%, while airline sales grew by 7.7%. Despite advances in digital payments, airlines are paying proportionately more to collect their revenue.

“The airline industry is hyper competitive, capital intensive and famously low margin. In such an environment every cost item needs to be looked at carefully,” said Sandrine Le Borgne, IATA’s interim director general and chief financial officer.

“The fact that payment transaction costs are increasing faster than industry revenues is unsustainable and, despite significant technological advances, highlights the critical need for greater cost efficiency.”

The $24.5-billion bill includes far more than the fees charged when a passenger pays for a flight. Direct transaction fees account for $20.7-billion, or 84.5% of the total. Airlines spend another $2.9-billion operating payment systems, managing delayed cash flow, employing staff and meeting compliance obligations. Fraud and uncollected payments account for a further $900-million.

Credit and debit card payments are expensive compared with other options. IATA estimates average card payment fees at 2.53%, compared with an overall average of 1.97% across payment methods. Some of the cheapest payment options carry fees as low as 0.01%.

Although the global $5 payment-cost figure cannot be applied directly to individual African airlines, the comparison highlights how little financial room they have to absorb additional expenses. Fuel prices and inflation are already placing pressure on their operations and on travellers’ ability to afford flights.

A cheaper way to pay

IATA believes greater use of alternative payment systems could help airlines reduce costs while giving passengers more choice at checkout.

Its 2025 Global Passenger Survey found that 29% of passengers preferred digital wallets, while 8% favoured local instant-payment services.

These preferences are relevant in African markets where consumers increasingly use mobile payment platforms and bank-based transfers instead of conventional cards.

IATA has introduced its own payment service, IATA Pay, which enables passengers to purchase flights using local instant-payment systems. The service is available in 34 countries, covering 38 payment schemes.

It also operates the IATA Financial Gateway, a platform that helps airlines and travel businesses manage payments across more than 170 countries using over 300 payment methods.

The aim is to giveairlines greater control over transaction costs while accommodating customers who prefer different ways of paying.

Travel agents are another focus. IATA is encouraging greater transparency around agency card payments, enabling airlines to assess whether cards used by travel businesses are more expensive than other available settlement methods.

Corporate travel payments are also being examined, with IATA developing systems intended to simplify reconciliation and reduce administrative expenses.

Failed payments mean lost sales

Cheaper payments are only part of the potential benefit. Airlines also lose revenue when customers cannot complete transactions.

IATA research indicates that approximately one in five attempts to purchase additional airline services fails because the initial payment is declined and the customer is offered no alternative.

These purchases can include baggage allowances, seat selection and other extras that have become important sources of airline revenue.

“In addition to cost-efficiency, IATA research shows that providing passengers with alternative payment methods could also have a revenue-generating impact,” said Le Borgne.

“About one in five ancillary purchase attempts are not completed because the initial payment attempt was refused and no other method was offered. Enabling more payment options has the potential to help airlines realize some of this lost revenue.”

For passengers, the changes could mean more convenient ways to pay for flights and additional services. Lower processing expenses could also ease pressure on airline costs, although savings would not necessarily translate into cheaper tickets.

The financial incentive is immediate. With global payment expenses already exceeding $24-billion annually, even modest improvements in transaction efficiency could release substantial funds.

* Gina Case is writer and contributor for Gadget.

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