KUALA LUMPUR: Airlines globally incurred US$24.5 billion in payment costs to process US$1.05 trillion in sales in 2025, a 10.4 per cent increases in total costs compared with 2023, according to the International Air Transport Association (IATA).
IATA said in a statement today that the increase exceeded the overall growth in travel sales over the same period, which rose 7.7 per cent from US$977 billion in 2023.
It said the average payment cost was US$5 per passenger in 2025, compared with IATA’s forecast net profit of US$4.50 per passenger for airlines in 2026.
IATA interim director-general and chief financial officer Sandrine Le Borgne said the airline industry was highly competitive, capital-intensive and operated on low margins, making it necessary to examine every cost item carefully.
"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,” she said.
IATA said further analysis of the US$24.5 billion in payment costs showed that US$20.7 billion, or 84.5 per cent of the total, was related to payment fees or the direct cost of completing each transaction.
"Another US$2.9 billion, or 11.8 per cent, was related to airline operating costs, including payment systems, delayed cash flow, staff and compliance, while US$0.9 billion was lost due to fraud or uncollected sales.
"Cards accounted for the highest cost per transaction, with average payment fees of 2.53 per cent, compared with the estimated overall average of 1.97 per cent,” it added.
IATA said the lowest-cost payment options were at 0.01 per cent.
The association said it is exploring several solutions to improve payments efficiency, including the introduction of alternative, lower-cost forms of payment for passengers and improve transparency on the cost of agency cards.
Its 2025 Global Passenger Survey found that 29 per cent of passengers preferred to use a digital wallet, while eight per cent preferred a local instant payment solution.
Le Borgne said providing passengers with alternative payment methods could also help airlines generate revenue.
"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 realise some of this lost revenue,” she said. - Bernama
