Kayak Says 40% Increase in Flight Prices Stokes Demand for BNPL

Kayak is hoping installment payments will lure travelers as flight prices soar.

The travel website announced Wednesday (Jan. 25) that it was working with buy now, pay later (BNPL) company Affirm to offer travelers payment flexibility amid a 40% year-over-year increase in the cost of plane tickets.

Both companies noted in the news release that they haven’t seen a corresponding decline in demand for travel.

Kayak says its search demand is up 46% year over year, while Affirm Chief Revenue Officer Geoff Kott said consumers in the fall of 2022 “increased purchases at airlines over seven times compared to the prior year.”

The company partnership lets travelers split the total cost of flights, lodging and rental cars/car sharing greater than $150 into monthly payments.

Companies using BNPL as an incentive to attract travelers is nothing new. Last year, Delta Airlines teamed with American Express to give travelers a BNPL option, noting that two-thirds of Generation Z and millennial travelers would be more likely to vacation if they had the option of paying for their flights in installments.

And as PYMNTS wrote recently, airlines have been launching digital innovations to improve a number of aspects of their business as the industry goes through a turbulent period.

For example, United Airlines launched a platform that lets corporate customers customize their business travel program contracts while choosing features like access to loyalty programs, more roomy seating, and discounts on leisure travel for employees.

And when Southwest Airlines was wrestling with its highly publicized troubles and flight cancellations during the holidays, it debuted a one-stop dashboard for customers to submit their requests for reimbursements and refunds.

Among the troubles facing the industry, United CEO Scott Kirby said last week, is a pilot shortage his airline is hoping to turn around with aggressive recruitment and a goal of onboarding 8,000 pilots in 2023, as well as staffing shortages still connected to COVID.

In addition, Kirby cited supply chain issues with new planes and unpredictable weather events among the constraints on the industry.

“The FAA and most airlines, with the exception of the network carriers, have outgrown their technology infrastructure and simply cannot operate reliably in this more challenging environment,” he added, days after a system glitch that shut down U.S. air travel.