A banking hub for airline joint ventures

An efficient banking hub for Airlines 

Economies will come from improving the flow of a service, from first receipt of a customer’s demand to the eventual satisfaction of that demand” – Prof. John Seddon, Toyota

Joint ventures (JV) have become a feature of the airline industry today. Since no single company has the operational capacity to serve the ever growing demands of their customers, they conjoin to form an alliance. 

Such a joint venture, in essence creates, a “metal neutral” business model that allows the carriers to focus more on the customer service rather than individual profit. A clear emphasis is placed on the cooperation between its members in a way that the whole is greater than the sum of its parts. 

These two focus points with any airline company today:-  

  • That of serving the demands of their customers by means of partnerships 
  • A disposition to reduce the costs of operation

opens up an opportunity for the creation of better banking services that are beneficial to not only to the carriers themselves but also to their customers.

Planes soar in air

In an industry where profit margins are slim, every last parameter in the cost equation is carefully optimized. Each saved cent counts. 

To streamline the passenger flow, for instance, most of the big airline companies in the world have created air hubs. If  it is economically inefficient to fly passengers directly from A to B the passengers are first pooled in a hub C and then flown to their destination in a batch. 

The pools/hubs are strategically chosen so that the passenger density is high and no airline either coming into the hub or going out of it operates at a loss on the whole. That is even though a single aircraft may lose some money those losses will be recuperated by the network as a whole. 

The hubs optimize the tourist flow. The airlines however have to deal not only with the flow of passenger but also with the flow of the money.  Much has been done to improve the former but sadly little effort has been expended in improving the flow of the funds. 

Money crashes in FX

Large movements in exchange rates impact airlines through three main channels; consumer decisions (demand), airline decisions (supply) and financial impacts” – IATA report, Dec 2015

Airlines are, by their very nature, an international business. To provide service to their global clientele they have to accept international payments. And since the customers are extremely price sensitive all currency conversion and any international transaction expense comes at the cost of spending capacity of the passenger. So while we have been focusing our energy on cutting fuel costs, expanding the aircraft capacity, maximizing the passenger density and predicting the weather we have had money quietly leaking away in a dark, deep and mysterious FX foxhole. 

Joint ventures, though no doubt, lead to an increased revenue for individual members  they also choke the flow of payments. The members are independent while at the same time a part of an alliance. The money made by alliance as a whole must be distributed as per the share of each partner. And once more since this distribution is international there are still more losses involved. The FX leaks now occur at two points instead of one. 

If you wanna be a bird

While it’s important to look for new sources of income generation it is equally important that the losses on the money that comes in are minimized. Since airlines are by and large a business of volumes, micro savings matter. 

The standard payment acquisition and disbursements methods just won’t cut it.  

Airlines need a special kind of banking service that can handle a large volume of micro international funds and minimize the loss on each transaction. A service that aligns with their mode of operations, facilitates disbursements among individual members and aids in creation of new avenues for growth. 

Why don’t you try a little flying? 

At wrinq we are creating an efficient “banking hub” for airlines with one goal in mind. To increase the net profit for the airlines industry. You’ll be able to:- 

  1. Offer your clients an ability to buy tickets in their preferred currency. Then convert the funds gathered, into a currency of your choice at the market rate. No conversion losses. 
  2. Have a bank account that naturally aligns with the requirements of a joint venture. Freely disburse the revenue share to member airlines without any transaction fees/ currency exchange losses.   
  3. Use our services without changing anything about your current infrastructure. Our systems are flexible enough to work with your existing accounts and fund collections methods.  

Together Oneworld, Star Airlines and Sky team have served in excess of 1.7 Billion passengers worldwide. The airlines industry as a whole is moving towards unification. But the payment methods employed are still segregated. This leads to an overall loss in revenue. 

International carriers are very susceptible to these losses. There’s a need for an international banking service that can reduce these losses on a day to day basis. We’re offering just that kind of service. 

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  • On January 26, 2020