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I want to book a flight, do I have to pay for next year? Here’s how it works

Travel demand is still recovering and air ticket prices are rising.

While some people are cutting back on spending due to rising prices, others are finding new ways to pay for their vacation plans.

More airlines partner with ‘buy now, pay later’ Businesses should offer customers the option to pay for their tickets in installments rather than in one lump sum. Some airlines even allow travelers to fly before the airfare has been paid in full.

“Consumers have become accustomed to using ‘buy now, pay later’ in retail and are excited to be able to use it in their travels,” said Uplift’s top commercial for BNPL. Director Tom Botts said.

But “this isn’t about giving consumers a trip they can’t afford or recommending a trip they shouldn’t be doing,” he said. “This is about helping consumers actually budget and pay for these dream trips.”

Uplift partners with over 30 airlines including United Airlines, Lufthansa, Air Canada and AeroMexico.

“The implementation of BNPL was part of the evolution of AeroMexico payments to offer customers more comprehensive payment options,” said Daniel Vega, Director of AeroMexico.

“Customers will definitely buy vacation airfare if they have affordable installments and one big upfront payment,” he told CNBC in an email.

Uplift is “100% focused on leisure travel,” says Botts. He added that consumers who use the service tend to spoil themselves if they can pay in installments.

“We see them buying premium economy and first class. [tickets] Normally they wouldn’t have bought it … consumers no longer buy the cheapest seat on the plane,” he said.

“For a long time, travel has had different types of holdout programs. . “Some people don’t always understand that they don’t have to pay for everything before they travel.”


These companies work in several ways.

Some, such as Uplift, run a simple credit check on travelers and use this to determine interest rates and payment schedules. These are short-term loans in nature, “literally in the blink of an eye,” Mr. Botts said.

Botts said most of Uplift’s partners offer 0% financing. “In many cases, there’s not even a cost for consumers to go ahead and take a seven-day cruise and pay over time,” he said.

However, the price depends on the traveler’s economic status. According to the website, the annual rate of uplift ranges from 0% to 36%.

When asked about travelers who may cancel their credit cards before paying off their loans, Botts said it’s “called fraud and has consequences.”

“By pulling out a credit report, we can actually understand and ensure that the consumer actually has the financial means to pay it back.”

Some, like Pay Later Travel, work like traditional layaway plans. There are no credit checks or financing requirements, but travelers must secure flights with a security deposit and pay in full before departure.

The company’s approval algorithms enable consumers to understand their ability to pay for high-ticket items and approve accordingly.

Additionally, BNPL’s company Splitit and others authorize full airfare on a traveler’s credit card, but split the payment into installments ranging from three to 24 months. The company reduces the credit line hold by the same amount each time an installment is made, according to the website.

Qantas, Australia’s largest airline, will launch BNPL service in May 2022. This allows international passengers on certain routes to book flights and pay later. However, fares are not fixed. Fares may increase due to changes in taxes and fees, according to the website.

Qantas also charges a fee to secure a seat, according to its website. This fee will be refunded if the flight is purchased or cancelled.

Not only airlines

Online travel agency Booking.com has partnered with Zip, a BNPL company that allows travelers to pay in installments for hotels, cruises, cars and travel experiences.

Laura Holdsworth, Managing Director of Asia Pacific at Booking.com, said: “Flexible options are very important for travelers, especially given the uncertainty of the last few years and the continued uncertainty seen globally. All the more so when you consider that the

Some companies require users to book through an app or their own website. However, some are available directly from websites operated by airlines and companies, such as Booking.com.

D3 Sign | Moments | Getty Images

Decrease in BNPL Loans Approved

Most BNPL companies operate by issuing loans.

However, with high inflation and rising interest rates, particularly large loans are “increasingly rare”, said Nandan Sheth, CEO of Splitit.

Uplift’s Botts told CNBC he doesn’t think so.

“The company’s approval algorithm can understand a consumer’s ability to pay for big-ticket items and approve accordingly,” he said. “We have a duty to be a responsible lender, and we need to ensure that consumers can pay off the loans we offer them.”

Splitit does not issue loans or check travelers’ credit scores, Sheth said. According to the website, all a customer needs is enough available credit on their credit card to cover the cost of the purchase.

“We do not collect data on consumer purchase history … we do not hijack consumers or resell alternative consumer offers,” he said.

But Botts said credit cards are a “terrible way” to pay for airfare, given the compounding nature of credit card interest.

Moreover, it is unclear whether consumers can actually afford the loans, he said.

“This just shifts the risk of repayment onto the credit card company. It’s a really bad spiral for consumers,” Botts added.

— CNBC’s Monica Pitorelli contributed to this report.

https://www.cnbc.com/2022/10/31/want-to-book-a-flight-but-pay-for-it-next-year-heres-how-it-works-.html I want to book a flight, do I have to pay for next year? Here’s how it works

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