While you can already buy plane tickets online with bitcoin through services like cheapair.com & expedia.com, I started wondering this past weekend what it would mean if the providers themselves (Delta, United, Southwest, American, etc) started accepting the cryptocurrency directly. From a business standpoint, what would this mean to the airlines? What would this portend for bitcoin adoption worldwide?
Let’s start off with a brief examination of the merits of using bitcoin online, specifically with plane ticket purchases. It’s fairly obvious that the vast majority of ticket purchases are made through the internet. Given that we are living in the digital age, there is no need to purchase over the telephone as the airlines have largely automated this process through the web. Further, these tickets are oftentimes purchased via credit card or a service such as paypal. Both credit cards and paypal charge fees in the range of 3% – 4% and can take several business days to clear transactions.
What is the Catch?
Here’s the catch with bitcoin – fees are miniscule (cents) and transactions are nearly instant. Quite simply its the cash of the internet and is the next step towards innovative payment solutions for a connected world. While credit cards dangle airline rewards points to lure in customers, bitcoin offers hard savings, plain and simple.
But how do the consumers save? Easy – without the 3% – 4% fee that comes with credit card or paypal use, the airlines don’t have to bake this into their cost. Therefore, they pass this savings onto the consumer while bringing in the same net profit. Win win for the airlines and the consumers. Not so much for credit cards and paypal.
Who will be the first airline to directly capitalize on this trend as opposed to letting intermediaries like cheapair.com and expedia.com suck up all the volume? Surely the airlines are smart enough to know the merits of the cryptocurrency and how it could immediately reduce cost in the 3% range while taking home the same profit. This is an absolute no brainer if you’re in business – that kind of cost reduction would do wonders for airline profitability. Surely they also know what public adoption would do for the bitcoin ecosystem, and how adoption + the bitcoin price would thrive as a result….and how the credit cards and big banks would be left behind.
I truly believe the better question is why hasn’t a Delta, United, Southwest, or American adopted bitcoin already? What’s stopping them from increasing profits and customer satisfaction almost overnight? Something tells me the tide will change soon, as each provider sees the golden opportunity on the table. It’s now simply a question of who will dive in first.