Why are crypto payments becoming so popular in the private aviation industry?

Despite cryptocurrencies surging in popularity in recent years, even the most vocal Bitcoin advocate would have to concede that few people regularly use their digital coins to purchase goods and services, with many wary of using the peer-to-peer cash replacement through fears of extreme volatility.

Although today cryptocurrencies are primarily viewed as digital assets, they were initially conceived as a safe, efficient, and decentralised alternative to fiat currencies. With a new, tech-savvy (and often Bitcoin rich) class of professionals beginning to emerge, we're starting to see cryptocurrencies used for their originally intended purpose — as a better way to make payments than cards or bank transfers.

In this article, I’ll look at what's driving that trend, and why the private aviation industry in particular is seeing such a surge in crypto payments.

A generational divide

According to CNBC's recent survey of Millennial millionaires, 83% stored a portion of their wealth in the form of cryptocurrencies. In stark contrast to both the baby boomers and generation X, of whom only 4% and 25% respectively owned any cryptocurrency at all.

As well as being more likely to store digital currencies as an asset, we also know that millennials are the primary demographic making direct purchases using crypto. As wealth begins to transfer to a younger generation, we're seeing luxury consumer staples such as watches, jewellery, exclusive event tickets and private jet charters being purchased using Bitcoin and its counterparts.

Crypto payments are soaring in the private aviation industry

Although few private aviation companies currently accept crypto payments, change is most definitely in the air. PrivateFly recently announced that almost 20% of its yearly revenue now comes from Bitcoin, a figure topped by Italian company Fast Private Jet, who reported that a massive 33% of its payments are now made using cryptocurrencies — figures that closely match transactional data from ECOMMPAY, where 20% of payments for private jet flights are made using a form of cryptocurrency.

Why crypto makes sense for private aviation companies and their clients

The private aviation industry regularly runs into several unique obstacles regarding the handling of bookings and taking payments for charters. Let's look at some of those issues to understand why cryptocurrencies are becoming welcomed as a payment method.

Last-minute bookings

One of the main benefits of private air travel is being able to book a flight at the exact time you need it — whether that's for an important business meeting or a spur of the moment family holiday. Since COVID-19, many operators are reporting an increase in last minute bookings, and it's something that the industry can find particularly challenging to accommodate.

When brokers receive a flight request at the last minute, they'll typically have to vouch for their client to operators, as an aircraft will never leave the tarmac without payment arriving in full. This system has worked well for decades, primarily relying on trust and regular repeat customers. However, as demographics shift and new clients express an interest in flying privately, it can be difficult to move funds to where they need to be before a flight takes off.

Crypto can easily circumvent these kinds of problems. Payments in digital currencies take just 3-15 minutes to process, requiring no intermediary banks and never being delayed by weekends or bank holidays. Clients can perform transactions whenever they wish and wherever they are based, significantly easing the booking process when paying for a flight at the last minute.

Low limits and declined payments

Another issue typically encountered by private jet companies (and their clients) is declined payments. Low limits on bank cards can force some customers to split payments into multiple transactions. This, in turn, often triggers a card acquirer's anti-fraud filters, resulting in declined payments and a great deal of frustration at a time when speed is paramount.

This is a complete non-issue for clients paying with crypto, where high limits and maximum security come as standard, meaning there’s little to worry about when it comes to transferring large sums of money.

High commissions

Although there's no denying the speed and efficiency of crypto payments, we need to remember that traditional SEPA payments are also pretty smooth and straightforward — not to mention cheap. However, if funds need to be moved worldwide, international card fees can quickly become expensive.
In an industry where clients seldom flinch at charter prices ranging from ten to several hundred thousand dollars, card fees of just 3% can quickly add up. Fortunately, a typical fee for a crypto payment is far lower than its Swift or SEPA equivalent, no matter the size of the transfer or the geographies involved.

More companies are now accepting crypto payments

As companies begin to appreciate the benefits of cryptocurrencies, more and more operators are offering this new form of payment. One such company, Mirai Flights, has recently built an instant private jet booking service centred around one-click payments. CEO Irakli Litanishvili, confirms that the industry is indeed beginning to sit up and take notice of crypto, despite some initial hesitance:

"The airline industry has historically taken a conservative approach to payments, though the landscape is becoming increasingly dynamic. Many companies don't understand how crypto works or are afraid it could attract negative attention from regulators or be unstable and complicated to exchange. Working alongside our payment partner, we've developed a way of receiving crypto payments without the volatility, converted straight to fiat currency."

In conclusion

Private aviation is currently experiencing unprecedented change, with COVID-19 as the catalyst and ongoing geopolitical turmoil forcing operators and brokers to embrace modern, efficient and borderless methods to receive payments. As wealth continues to transfer to the millennial generation, demand for native crypto payments will grow further, meaning that companies who refuse to adopt this now safe, well-regulated form of currency will miss out on a huge slice of their potential clientele.