Oliver Wagner, CEO of AirPlus.
Two months after the start of the new school year in September, how do you see the recovery in business travel?
Oliver Wagner – The recovery is well underway. October was our best month for some time, with activity back to almost 50% of pre-Covid levels. In other words, the results are in line with those announced by the major airlines such as Lufthansa and Air France
. Another positive point is that the share of domestic business travel has fallen back, whereas during the pandemic it accounted for nearly three-quarters of travel in France, Germany and elsewhere in Europe. Intra-European traffic has started to pick up again since the second quarter, with the average value of transactions tending to rise. As for long-haul traffic, it is still limited, especially with regard to Asia-Pacific. However, as the US borders have only just reopened, we are already seeing a concrete and immediate effect with a growth in bookings to this destination in recent weeks of around 70%. We are very confident that this growth will continue.
What fuels your optimism?
O. W. – If we look at the United States, domestic travel there is back to pre-Covid levels. In China, we have seen weeks where activity was even higher than in 2019. For his part, Carsten Spohr, the CEO of the Lufthansa Group (editor’s note: of which AirPlus is a subsidiary), recently estimated that, given the very significant growth in bookings seen within his group, the travel sector would soon return to 90% of what it was before. So, of course, the winter months are always “challenging” with fewer trips. But there is a real need to travel again. We conducted a survey this summer of 750 business leaders. A large majority expect business travel to return to at least pre-Covid levels within the next three years. At the same time, only 20% believe it will be lower.
has their own crystal ball, but regardless, we remain optimistic.
We conducted a survey this summer among 750 company managers. A large majority expect business travel to return to at least pre-Covid levels within the next three years.
Due to telecommuting and the alternative of video conferencing, many observers predict that 20% of business travel will disappear. You don’t seem to share this view entirely. Why is that?
O. W. – Here again, this is a matter for the crystal ball. Indeed, some of our clients say they want to reduce internal travel, for example between their head office and their regional offices. But
They also say they need to make acquisitions to develop their business, to attend conferences, to meet their customers and their employees. And I’ve seen it myself in my recent travels, including my visit to Paris: talking face-to-face with your teams, being able to talk to your employees in ways other than video, it’s not the same thing. So, while finance departments are keen to see a reduction in travel expenses, sales, marketing and HR managers feel an urgent need for interaction. Given this, I don’t know if business travel will return to 85%, 95% or 100% of what it was before, but it is certain that professionals will start travelling again.
Through the spending of companies, are certain trends beginning to emerge with regard to post-covid business travel?
O. W. – At the moment, companies are allowing their travellers to take higher booking classes, a business class on the plane or a first class on the train rather than a second class for example. This is to ensure that they are at a greater distance from other passengers. We’ll see if this trend continues. In any case, there is a change of mindset within companies regarding the safety and health of their employees, who are in demand for this. All this is, in a way, favourable to us, since the transactions are therefore higher. This can also be explained by bookings made in the last few days and a trend towards “travelling less, but better”. With longer stays, companies are accepting higher travel costs
Let’s move on to payment solutions and AirPlus news. How far have you got with the transformation of your IT infrastructure, one of AirPlus’ major projects in recent years? And what can your customers concretely expect from it?
O. W. – It is nearing completion. We have already migrated two of our three products, the corporate card and the virtual card, to our new IT infrastructure, which is also based on a new ERP system, SAP’s S4/HANA, which is among the most modern on the market. We still have to migrate our corporate accounts, which will be done next year. Changing our infrastructure in this way and replacing a 30-year-old system was obviously a challenge, but it was this change that enabled us to launch our corporate card and the new version of our virtual card in France, for example. In the same way, it is thanks to this infrastructure that we can offer our customers a new portal giving them faster and simpler access to our solutions. As everything is automated and processes are accelerated, this will enable us to develop new products and services.
opperate new functionalities at the same time, which can be integrated into the new platform in a dynamic way.
The digitalization of payments has accelerated with the pandemic. How are you responding to this development?
O. W. – Digital payments are growing strongly and will undoubtedly continue to do so spectacularly in the future. I can even see it in the bakery next door to me, which has gone from “cash only” to payment by card in just a few months. And that’s just one example. This trend, which was already visible before the pandemic, reinforces the appeal of our virtual card
. This solution has huge growth prospects in the coming years. It gives our customers the flexibility they are looking for by being fully customizable by merchant category, maximum transaction amount, single or multiple use. To increase its reach, we will make it available in a mobile wallet that will be launched in Germany in the first half of 2022, before other countries follow. This will make life easier for travellers, as they will be able to have this payment solution with them at all times when they travel.
You also seem to be making this payment solution the cornerstone of your diversification. Is turning to other types of expenditure all the more essential today?
O. W. – Our customers are increasingly demanding more centralization and integration of their expenses. And this does not only concern the travel sector. The virtual card obviously meets the expectations of companies for the payment of expenses related to accommodation and car rental. But it is just as well suited to all those recurring purchases such as office supplies or small equipment, subscriptions, etc
. It can also be integrated with corporate procurement platforms. In Western Europe alone, B2B purchases represent a market of around 40,000 billion euros, which means there is enormous potential for a centralised payment solution in an area where management is still very administrative. We believe that we have the ideal technology with the virtual card to support our growth strategy beyond business travel. In the first half of next year, AirPlus will launch a mobile wallet in Germany that integrates its virtual card.
Does this mean that AirPlus is moving away from travel?
O. W. – Certainly not. Everything related to business travel will remain at the heart of our activity. In this area, the need to centralize expenses and integrate the company’s products and services will continue.
ation in ERP systems is always important for companies. With our lodged accounts, we have the ideal product for managing air travel expenses. With the virtual card, we only cover a fraction of our clients’ hotel expenses, which leaves plenty of room for growth. And, while not centrally driven, the corporate card is also a growth market for us. In addition to its integration into Apple Pay, which is expected soon, we will also offer this payment solution in Italy and Switzerland. Today, we are issuing corporate cards in France, since 2020, as well as in Germany, the United Kingdom, Belgium and the Netherlands. All in all, at the moment, our corporate accounts are offered in 60 countries worldwide, while we are present in 17 countries with our virtual cards and in 13 countries with the corporate card. So there is a huge geographical growth potential for our payment solutions.
The Lufthansa Group has mentioned the sale of its subsidiary AirPlus. What is the status of this project?
O. W. – This question about a possible sale should be put to Lufthansa first. I cannot speak for my shareholder. But I can say that no decision has yet been taken and that Lufthansa is not under pressure to make a decision quickly either. Lufthansa has just repaid the financial aid from the German government in full. So there is no immediate need for the group to sell its assets.
So not immediately, but in the future, who knows… Put yourself for a moment in the shoes of Carsten Spohr, the CEO of Lufthansa, faced with this problem. What would you do?
O. W. – I am certain and quite confident that Carsten Spohr and the entire Lufthansa management will carefully consider the options and find the best possible solution. AirPlus is a great company and I am not at all worried, no matter what decision is made. We are a growing company in a rapidly developing payments market and we also operate globally. For AirPlus, it is important to have a supportive owner and always has been. It is and I am sure always will be, regardless of who the owner is.
I’m Michelle, and I love to travel. As a former hotel expert for one of the world’s largest hotel chains, I’ve stayed in nearly every type of room imaginable (including many that were not so desirable!). Nowadays, I am fortunate enough to be able to explore the world on my own terms. From international flights to learning different languages, there is nothing too far out of reach!