BTC and other Cryptocurrencies for Charter Payments

BTC and other Cryptocurrencies for Charter Payments
Adobe Stock Illustration by John A. Manfredo

Most economists who believe cryptocurrency has no merit have never tried to book a last-minute charter flight after banking hours or paid high credit card fees on a trip costing tens or hundreds of thousands of dollars. Cryptocurrency advocates say it can sometimes be the best solution for making quick, low-cost bookings because airlines don't move until operators get paid, and even though the charter industry promises to be ready when you are, that promise is conditional: airplanes won't move until they are paid. The demand for digital currency payment options continues despite this year's collapse in cryptocurrency values.

“Many [charter] companies ignore the growing number of individuals who hold cryptocurrencies and are willing to spend them,” says Simona Moosar, business development manager at Ecommpay, an e-payment processor that handles such payments for about two dozen charter companies in Europe.

The demand is reportedly driven primarily by 35-and-younger, crypto-savvy clients, but its extent is difficult to determine. Some charter providers cite only rough uptake percentages without defining whether the figures represent customers or revenues, and payment processors do not make the information public. Bitcoin, the first and still dominant cryptocurrency, is owned by between 23 million and 27 million Americans, according to recent data.

U.K.-based retail booking platform PrivateFly (now part of Directional Aviation's OneSky portfolio) enabled bitcoin charter payments in 2014, five years after the digital currency was introduced. A crypto payment option was introduced by Florida-based Monarch Air Group in 2017. 

David Gitman, Monarch executive director, says traditional transactions still account for most of the company's flights. “We delivered this alternative because our clients requested it."

A Challenge to Overcome

To gain wider acceptance, cryptocurrency boosters acknowledge that it will have to overcome challenges, such as its association with money laundering, illicit activities financing, and large-scale scams, sustainability concerns, and, most recently, the collapse of cryptocurrency values and institutions. "We are aware of the skepticism surrounding buying cryptocurrencies," says Fast Private Jet CEO Mauro De Rosa. The story is different when it comes to paying with crypto."

Eymeric Segard, CEO of LunaJets, another European charter operator that accepts cryptocurrency, says that despite the recent devaluation, customers still can make a profit. As a result of the recent loss in value of cryptocurrency, he says, “We have not seen any impact on crypto-paid charters.”.

Cryptocurrency transactions are now available at more U.S. lift providers. Mike Guina, president of FlyExclusive, a charter, jet card, and fractional fleet company based in North Carolina, says the company began accepting crypto payments last year for charter and jet card purchases.

The payment option was adopted by Stratos Jet Charters of Florida this year for security reasons. “We felt accepting crypto would dramatically reduce our risk versus credit cards,” CEO Joel Thomas says, alluding to the blockchain technology that provides traceability for cryptocurrency transactions.

Transact quickly and with Low Fees

Other potential benefits include cost and speed. Compared to credit card fees, cryptocurrency payments typically cost about 1% of the amount transferred. Transferring money internationally can take several hours, or even several business days, depending on the bank's fees.

The cost of the flight can be purchased in whatever currency the charter contract is quoted in—typically U.S. dollars or euros—by transferring the requisite amount of crypto from your digital wallet. It usually takes 20 to 30 minutes for transactions to be completed. Having been paid in a specified currency, the charter provider does not have to worry about fluctuations in the value of digital coins. 

It is still a matter of caution for some flight providers when it comes to potential risks. The company says it charges its clients an additional 20 percent transaction fee to "cover the volatility of the market price" of bitcoin.

Moreover, payment agents continue to be concerned about the adequacy of identifying the individual or organization making a payment, as well as the propriety of the funds, as regulations increasingly emphasize know-your-customer, know-your-business, and anti-money laundering (commonly called KYC, KYB, and AML). Adding cryptocurrency only further exacerbates the aversion to expanding payment options in the charter industry, says Per Marthinsson, chief revenue officer at Avinode. It is necessary for cryptocurrency to evolve further in order to achieve a level of risk appetite that is acceptable."

According to Marthinsson, Avinode, a business-to-business charter booking platform, does not support cryptocurrency transactions through its PayNode payment processing service, but Marthinsson noted, “Between brokers and operators for a wholesale transaction, there’s very little need for bitcoin.”

There is also a question about the "stickiness" of crypto transaction preferences. The cryptocurrency pioneer Private Fly claims to have accounted for 20 percent of bookings at one time, but "payments made this way currently account for less than 10 percent of transactions," says Marine Eugène, the company's European managing director.

Digital wallet apps that allow no-fee cash transfers, such as Zelle and Venmo, are growing in popularity; if transaction limits are raised, they may also offer low- or no-fee payments. As well as central bank digital currencies—digital assets directly backed by governments and available to the public—are now being discussed and adopted. These can serve the same purpose, while possibly inspiring a greater level of confidence among the public.

You don't have to wait if you have cryptocurrency now and want to book a charter after banking hours. It's as simple as opening your wallet.

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