Beyond Mobile Payments: Personalization, Loyalty & Revenue Growth

The 2017 Imperative for Global Airlines:
Beyond Mobile Payments
to Personalization, Loyalty & Revenues
Supporting Mobile Payments is the First Critical Step
To Generate New Revenues and Position Airlines
For Rapid, Unprecedented Mobile-First Growth & Operations
By Kristian Gjerding
CellPoint Mobile CEO
© Copyright 2016 CellPoint Mobile

TABLE OF CONTENTS
3. Executive Summary
5. Mobile Booking & Alternative Payment Methods: Revenue Creators
7. Mobile Booking & Loyalty: A Revenue Connection
9. Conversational Commerce: Mobile Communications via Video Capabilities & Technology
12. Blockchain's Potential in the Mobile-Centric Travel Sector
14. Mobility in Action: The New Passenger Journey
16. Conclusion

The Mobile Payments Imperative for Global Airlines: 2017 Outlook | www.cellpointmobile.com / 3
EXECUTIVE SUMMARY
As global airlines begin to embrace mobility as a way to generate new revenues by making it
easy for passengers to pay from their smartphones, they are setting the stage for an infusion of
mobile data that can transform other aspects of airline interactions, transactions and operations.
Airlines and travel companies can leverage payment data and other data from the mobile
environment to launch a broader, more powerful mobile-centric strategy, but they must do so
quickly because of the rapid pace of change, innovation and passenger demand in the travel
market.
By baking mobile-first strategies and processes into the brand DNA, airlines can keep pace
with industry-driven mobile innovation, capture new revenues from $800 billion in worldwide
digital travel sales expected by 2020, reshape and enrich their loyalty programs, explore
blockchain-supported capabilities to make travel easier and more secure, and position themselves
for their increasingly important mobile-focused Millennial customers.
But they must do so quickly and comprehensively if they are to emerge as passengers’
full-service "mobile-first travel companions." This 2017 Outlook Report examines current
airline trends and challenges for airlines and travel companies as they face their mobile-centric
passengers and a mobile-first marketplace.
$800
billion
worldwide
digital travel
Mobile-
first
flyers
Millennnials'
influence
Chat
and video
capabilities
Omni-
channel
demands
Hundreds
of
APMs

INTRODUCTION
Now that airlines are beginning to embrace the need to generate new revenues by enabling
mobile payments for their passengers, market demographics and market innovation demand
that they move much more quickly and comprehensively to embed mobility throughout airline
operations and the entire passenger journey.
Today’s airlines and travel companies face a market in which innovation is driven externally.
The ability to support a range of mobile transactions for their mobile-first passengers will soon
emerge as a critical, defining brand characteristic. In this new travel market, the push for
mobile-first strategies and brand DNA must start in the executive suite and filter throughout
the entire organization if airlines hope to keep pace with a fast-moving mobile market and its
revenue potential.
Emboldened by a mobile-centric strategy, airlines will be able to attract more passengers,
create more opportunities and paths to purchase, cater to a younger, mobile-focused customer,
re-energize their loyalty programs and position themselves for success in the mobile environment.
Surrounded by mobile capabilities, passengers
will be able to shop for and buy travel products and
ancillary services before, during and after their trips,
verify their travel identities, communicate with
airlines in a variety of new and engaging mobile formats, and
interact with frequent flyer and loyalty programs.
This report looks at the powerful imperative of mobile-first strategies for payments, loyalty,
operations, interactions and airlines' ability to cater to customers who arrive with high
expectations.

Mobility, Millennials and
Alternative Payment Methods (APMs)
For airlines and travel companies, numbers and demographics describe the challenge
of operating in a marketplace as its shifts in real time toward mobile.
Today, 83% of passengers travel with mobile devices (SITA), and more airline searches
and bookings are being made on smartphones and mobile devices.
Much of that shift to the mobile environment is led by younger travel customers who are entering
the marketing and bringing their smartphones – and expectations – along for the trip.
The first generation to grow up steeped entirely in
Internet access and mobile technologies, Millennials
(19-35-year-olds in 2016) adopt new mobile products
and services more quickly than older generations.
Paying from a smartphone is quickly becoming the norm for them. For everyday purchases
– whether lattes or airline tickets – they expect friction-free checkouts from APMs and payment
innovators such as Android Pay, PayPal and easy-pay capabilities from American Express,
Apple Pay, Samsung Pay, Amazon, Visa and MasterCard. Several hundred APMs already operate
around the globe, and their number is sure to increase in coming years.
Millennials represent an enormous, trend-setting demographic that brings tremendous spending
power as well. Boston Consulting Group notes that “although members of the Millennial
generation are not yet the core customers of airlines, hotels, and travel companies, they will be
in five to ten years, when they enter their peak earning, spending, and traveling years. In fact,
their spending on business flights is projected to grow sharply in the next several years, reaching
nearly 50 percent of the total by 2020 or so and remaining strong for the 15 years after that.”

Airlines can and must build the mobile foundation now to give
them the flexibility to meet the needs of their current customers
and be ready for mobile-first future customers.
Some of the quickest and most strategic steps that airlines
can embrace as they build their mobile payment capabilities
include:
Support a range of APMs. Maximizing conversion rates is key to implementing a successful
mobile strategy for mobile-first Millennials and the expectations they bring to the travel market.
Airlines must choose a mobile-first payment service provider (PSP) platform that supports a
suite of next-generation APMs, insulating the airline from resource-intensive, one-off integration
projects.
Leverage frictionless payment capabilities from APMs. Pursue mobile push notifications for
ancillary products and services to encourage on-demand payments and impulse purchases,
and then make it easy for passengers to pay within the mobile channel.
Harness the buying habits of the mobile-first Millennial. According to Hospitality.net,
46% of mobile-first Millennials buy travel-related products via smartphones or tablets, and they
prefer seamless in-app purchases. They expect to be able to store their payment credentials in
a central location, such as a smartphone or app, ensuring merchant access to their data and
negating the need to enter data into lengthy forms or screens.
For airlines, the message is clear: make it easy for mobile-first Millennials to engage on their
terms, offer a range of payment methods, and support a range of mobile devices throughout the
world. Engaging at the mobile level with this key market demographic will support a variety of
travel activities, including booking and the sale of ancillary products and services before, up to
and on the day of travel.
"WOULD
YOU LIKE TO
UPGRADE
TO FIRST
CLASS?"

MOBILE BOOKING & LOYALTY
A common piece of advice in the travel business today urges airlines, hotels and travel companies
to adapt their loyalty programs and frequent-flyer programs to the mobile environment.
Because of the dominance of smartphones, however, perhaps it’s time to turn that thinking
around and rebuild loyalty programs from the mobile ground up. Doing so can enable airlines to
take advantage of the mobile channel and the revenue potential from high-value frequent-flyer
and loyal passengers.
Two factors make the mobile channel unique during travel: intimacy and necessity.
For many passengers, a smartphone or mobile device is often their primary connection to
the rest of the world as they travel. It is immediately available for online searches, communication,
notifications, last-minute information and status updates about what's happening.
For airlines, the mobile channel is the most intimate and flexible way to interact with today's
customers and passengers, and in some countries, it is becoming the primary channel for travel
interactions.
According to Phocuswright, 60% of 2017 gross travel
bookings in China will be made on mobile devices,
and mobile-first commerce growth is occurring in India,
Scandinavia and elsewhere.
Smartphones and other mobile devices can serve as powerful channels for building customer loyalty,
whether through delivering the exact information a passenger needs at the exact minute he/she
needs it, or by delivering a personalized offer at just the right time for just the right purpose.
From information provided at sign-up and through ongoing interactions with a frequent-flyer or
loyalty program, airlines can fine-tune and personalize the loyalty experience, and they can capture
revenues throughout the passenger journey – predicting, planning, booking, checking in, boarding,
on board, at the destination and post-trip. Airlines can convert "lookers into bookers" through
loyalty offerings, and they can then convert those bookers to loyal customers.
Stored
payment data
Mobile
payments
Frequent flyer
program
Personalized
messaging
Real-time
offers

Loyalty expert Colloquy reports that 71% of travelers would
like to book flights and hotel rooms via their smartphones.
Given that the bar has already been raised, airlines can re-think
loyalty and frequent flyer miles from a mobile point of view.
Build loyalty around mobile, not vice versa: It's time to turn loyalty strategies on their head.
Loyalty programs should be centered on the mobile ecosystem, and a host of legacy loyalty
patterns and practices – plastic membership cards, for example – can be phased out.
New members can enter and be authenticated into loyalty programs from the mobile channel
first. Embedding loyalty into the mobile device can make transactions, sales and interactions
intimate, seamless and satisfying.
Personalize the mobile experience: Create mobile apps that work for program members.
Loyalty program apps should store members' program details, contact information, preferences,
travel habits, and purchase and behavioral histories. For members, the app should be a tangible
sign that the airline exists to serve, and not just sell.
Invest in a mobile-first platform: Access to the robust and always-evolving mobile market-
place is a must, and airlines need mobile-first platform infrastructures that can help them adapt,
integrate and change with the market and innovation. Needed components include easy
integration to the mobile environment, personalization capabilities and predictive data analytics.
Leverage Loyalty to Address Capacity: With an average of four new aircraft entering the
market each day, and with airline load factors at a record-high 80% in 2016, according to the
International Air Transit Association (IATA), airlines face the challenge of filling new seats.
Aircraft manufacturer Boeing estimates that the number of single-body and wide-body craft
in the skies will double in the next 10 years as part of airline replacement plans.
The mobile channel, combined with mobile-centric loyalty programs, can help customers book
their tickets directly from the airlines – which they prefer to do – and can help airlines capture
revenues and fill seats. Last-minute offerings and geo-location services in the mobile channel
can help airlines increase yields and drive more revenues by making it as easy as possible for
passengers to find, book and pay for their flights directly from their smartphones.
Reshape Travel Loyalty Programs
for Mobile Commerce and Revenues

Mobile is quickly becoming the primary channel through which passengers interact with airlines,
travel companies and brands. As a result, the mobile environment is also rapidly becoming a
major focus of airlines' direct-channel, digital communication strategies.
In 2015, some 43 trillion mobile messages were sent globally
through social networks and mobile devices, according to
Juniper Research, with traffic expected to reach an astounding
438 billion messages daily by 2020.
At this crossroad, the challenge for airlines is simple but critical:
leverage those steady streams of mobile communications for
travel-related interactions and transactions.
CONVERSATIONAL COMMERCE:
Mobile Communications via
Video Capabilities & Technology
"WOULD YOU LIKE
TO PRE-ORDER
A MEAL FOR YOUR
FLIGHT?"

CHATBOTS:
NEW DIGITAL COMMUNICATION TOOLS
Messaging apps, or chat apps, boast a number of distinct characteristics that make them
appealing to airlines, including their proliferation, retention/usage rates, and important user
demographics. Combined with advances in artificial intelligence, the popularity of messaging
apps has created a new generation of configurable marketing tools that enable airlines and
brands to communicate with their mobile-first customers in new ways at reduced costs.
Chatbots rely on artificial intelligence software that can "converse" with humans to answer
simple questions or provide basic information. They can be configured into other popular
messaging apps, such as Facebook Messenger, WhatsApp, Telegram, and Slack.
The scope and complexity of a chatbot is determined by the developer’s algorithmic aptitude
and the airline’s innovation threshold.
United and Alaska Airlines, for example, have used chatbots for several years as part of their
digital toolkits. Chatbots.org notes that United's chatbot answers 75,000 questions a day for
passengers. Likewise, KLM has integrated chatbot capabilities via Facebook and WeChat.
One video = 1.8 million words
Forrester Research indicates that a one-minute video is worth 1.8 million words. Imagine that.
Today's customers demand that their services and interactions have both a look and a feel,
and video can play a big role in meeting that demand for communications that both capture
customers' attention and support transactions. Strategically placed videos in the mobile
environment can extol the value of airline services and products, bringing them to life in a way
that clearly differentiates them and drives the sale. A short, targeted video, for example,
can feature an airline ancillary product (new menu item, beverage, comfort item), aided by
the ability to purchase it through the airline's mobile app.
Moreover, chatbot and video synergies can support a variety of interactions and revenue-
generating activities in the mobile channel. With high-performance video targeting and chatbot
capabilities, airlines will be able to deliver the most relevant messages to the most relevant
audiences, based on their device, time, location and preferences.
For example, chatbots can be programmed to deliver a
targeted, location-based video in real time. Would a high-value,
loyal customer in coach respond to a short chat message
or video offering a day-of-travel upgrade to first class?
Does a family traveling with children need to check more
baggage at the last minute?

Airlines should keep these strategies in mind as they explore and embrace expanded
communications and transaction capabilities in the mobile environment:
Choose the right mobile-first digital platform. Select an infrastructure that integrates with
the payments ecosystem and loyalty programs, and provides best-in-class messaging capabilities
(including chat bots and video services) so that communications can be personalized and
converted to sales.
Deliver the right information at the right time. Chat and video communications delivered in the
mobile environment should feel like a helpful personal assistant, especially on the day of travel.
A rich interactive experience that delivers the right message at the right time to the right person
is the foundation of successful mobile marketing. To achieve success, airlines need a compelling,
content-rich, conversation-driven marketing strategy.
Leverage payment technologies, such as pay-by-link, stored payment capabilities, and
emerging alternative payment methods, such as Android Pay and Apple Pay, to make mobile
interactions seamless and satisfying from these types of chat and video capabilities.
Measure & Manage: As with any successful customer-facing strategy, measurement is critical.
Leverage data to measure critical touchpoints, such as meaningful engagement with chat,
video and other types of messaging and content. Are passengers responding to messages?
Which messages and pieces of content are most effective? When do passengers engage?
How frequently do they engage? How can content be optimized to deepen engagement, improve
results and drive more sales?
The incorporation of chat and/or video engagement is not meant to replace an airline's direct-
channel marketing strategy. Instead, chat and video can extend an airline's presence while further
strengthening passenger relationships that create connections, deliver new revenues and deepen
brand loyalty.
"Would you like to
receive updates about
your flight
via Messenger?"
"Your flight is now
boarding. Take your
boarding pass to Gate C-7.
See you on board!"
Passenger:
"Can you change
my seat to the aisle?"
Chatbot:
"Your seat has been
changed to 13C.
Enjoy your flight!"

BLOCKCHAIN'S POTENTIAL IN
THE MOBILE-CENTRIC TRAVEL SECTOR
Blockchain processes, which grew out of a need to verify
transactions involving Bitcoin and other cryptocurrencies,
have great potential in the travel sector. Relying on public and
private ledgers to verify and authenticate everything from
payments to stock trades to supply-chain deliveries, blockchain
processes can also be put to use to make travel easier
for passengers.
How would blockchain materialize for airlines and travel companies?
Blockchain holds great potential, for example, in its ability to create a unified passenger ID from
existing but disparate data and records – distributed identities that include government-issued
travel documents (passports, visas, IDS, licenses), company data, airline and travel records,
loyalty program memberships, payment data, and more. A verified digital identity could follow a
passenger from beginning to end of a trip, with fewer interruptions or repeated requests for the
same data or information.
In the loyalty sector, blockchain has the potential to streamline and verify the earn-and-
redeem processes involved in airline and travel loyalty programs. Blockchain applications could
make it easier for passengers to authenticate and use their hard-earned miles and points, while
protecting airlines and loyalty programs from fraudulent manipulation, hacking, cybersecurity
threats, theft and other forms of loyalty program fraud.
On the payments front, airlines can rely on vendors' configurable platforms to integrate and
update basic blockchain processes, digital wallet blockchain payment processors, and other
payment-related services without massive integration efforts or internal disruption. Because the
mobile environment changes and evolves so rapidly, it behooves airlines to rely on partnerships
with industry innovators who can help them bring products to market quickly and profitably.
Within airlines, blockchain technologies can be supported and integrated from an underlying
e-commerce orchestration platform. As the blockchain universe evolves within the travel sector,
integration of new products and services can be handled easily, without massive integration or
implementation projects.

Blockchain products should be considered,
explored and integrated if they:
 Make travel easier for passengers, airlines
and transportation companies
 Enable airlines and travel companies to bring
new products and services to market quicker
 Reduce fraud around mobile payments and
loyalty program transactions
 Streamline and reduce the number of repeated
data requests that occur during the travel journey
 Leverage mobile capabilities for new innovative
travel business services and travel solutions
Security Passenger IDs Payments Loyalty programs

On a morning commuter train,
laptop-equipped Mary searches
for and finds the perfect itinerary
for an upcoming business trip.
Her preferred airline offers a
same-day early morning departure
and a late-night return flight.
As she approaches her station,
she saves the search, closes the
laptop, exits the train and switches
to the smartphone for her walk to
work. As soon as she opens her
smartphone, the airline’s mobile
app recognizes her laptop-initiated
itinerary. She receives
a push notification
offering the best fare
available for her
chosen itinerary.
Because her payment
data is pre-stored in the app, she
books the flight and purchases the
ticket with a one-click payment
process on her smartphone.
Several minutes later, another
app message notifies her of the
availability of lounge access and
limousine service on the day of
her trip. Using either Apple Pay or
Android Pay, also pre-stored on her
smartphone, she purchases both
ancillary services.
On the day of the trip, a block-
chain-supported verified passenger
ID app speeds her passage
through airport security in a matter
of minutes.
Because her
payment data
is pre-stored
in the app, she
books the flight
and purchases
the ticket with a
one-click payment
process on her
smartphone.
On a morning
commuter train,
laptop-equipped
Mary searches for
and finds the perfect
itinerary for an up-
coming business trip.
Her preferred airline
offers a same-day
early morning depar-
ture and a late-night
return flight.
As she approaches
MOBILITY IN ACTION:
The New Passenger Journey
How would a typical travel scenario play out if airlines
positioned themselves as “mobile travel companions”
to their passengers? Here's one example:

Conclusion
Driven by market demand, mobile proliferation, rapid
third-party innovation, growing expectations and market
demographics, airlines and travel companies face the
challenge of reshaping how they operate and succeed in
a new mobile marketplace.
Enabling passengers to pay for tickets, services and travel
products from their mobile devices is a first step toward
mobile-centric operations and revenues.
With directives that start within the highest levels of
the executive suite, airlines and travel companies must
quickly begin to infuse mobile-first strategies throughout
other business services so that loyalty programs, passenger
interactions, passenger transactions and ancillary sales
can serve passengers well and capture new revenues from
the mobile marketplace.

About Kristian Gjerding
As Chief Executive Officer of CellPoint Mobile, Kristian Gjerding leads the mobile payments
firm as it helps airlines and travel companies around the world deploy mobile-first payment and
e-commerce solutions in a marketplace that is shifting rapidly to the mobile environment.
For more than a decade, Gjerding has helped shape the payments ecosystem by helping global
airline, payments and trade organizations establish best practices and standards around
NFC communications, mobile payments and remote payments, including advisory roles with
the International Air Transport Association (IATA), Mobey Forum, National Retail Federation and
others. He also co-leads CellPoint Mobile's Travel Innovation Hub.
About CellPoint Mobile
Travel is at the heart of discovery, learning, commerce and change. It’s also at the heart of our
business, and that’s why CellPoint Mobile makes travel easier by providing airlines and travel
companies with comprehensive, mobile-first commerce and payment solutions that enhance their
customers’ experience, increase revenues and improve margins.
With offices in Miami, London, Copenhagen, Dubai, Pune and Singapore, CellPoint Mobile
simplifies the integration of complex commerce and payment solutions for global and regional
airlines and travel companies – quickly and without friction. The company’s Travel Innovation
Hub creates blockchain-supported products and services for travel payments, loyalty program
transactions, passenger IDs and security.
info@cellpointmobile.com
www.cellpointmobile.com

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