The Challenge

The client is one of the largest airlines in the United States. It operates flights to Asia, American Samoa, Australia, French Polynesia, Hawaii, New Zealand, and the United States mainland.  

During initial discussions with Edgar, Dunn & Company (EDC), the airline was looking at identifying payments-related opportunities and reviewing its payments acceptance and issuing functions. One of the key objectives for the airline was to identify and prioritize opportunities to increase revenues and/or reduce distribution costs.  

How EDC helped

EDC applied its proprietary ‘360° Payments Diagnostic’ methodology to identify and prioritise key opportunities for the airline to reduce cost of payment acceptance and to increase payments-related revenues. EDC performed a diagnostic of the current situation of the accepted payment methods for the (in terms of cost of acceptance) and demonstrated cost savings potential through rationalising relationships with third parties such as payment gateways and acquirers.  

EDC also Identified and assessed strategic options by ranking them according to the size of the opportunity and the ability to achieve a successful outcome and performed a SWOT analysis of the current payments acceptance strategy. EDC also reviewed the use of issuing payment products, such as gift cards, loyalty/rewards or co-brand products.  

As a result, EDC identified opportunities for the airline that could generate ~ $10-15mn in revenue & $5-10mn in cost savings over a 3-year period. Examples of revenue-side initiatives included management of card approval rates, review of SLAs, acceptance of AFP (alternative forms of payment), surcharging, etc. On the cost side EDC developed a model to analyse current cost and estimate potential savings and assisted the airline in negotiating its acquiring fees, agent VAN acceptance policy and fraud controls.  

EDC also supported the airline in running an end-to-end RFP process to select a best-in-class payment gateway vendor with a view to optimize card acceptance processes, support its multi-channel customer centric strategy and offer relevant local payment methods (including AFOPs) in different geographies.

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