As we start to put the pandemic behind us, a growing number of people are travelling now and paying for it later.
The Buy Now, Pay Later (BNPL) model gained traction in the retail sector during the pandemic. It is means for people to make expensive online purchases in uncertain economic times and span out the payments, often with no interest. Now, it’s made its way to the travel industry – and at a time when there’s so much to make up for on the wanderlust front.
Travel Now, Pay Later Model
Companies have emerged onto the scene to allow travel consumers to buy vacation packages, flights, cruises, hotels, and other travel-related products with payment plans that can span from a few months to over a year. Typically, there aren’t upfront fees, and zero or very low interest charged. Essentially a personal loan, the solution allows people to pay for their vacation long after the tan fades with fixed, regular monthly installments. Naturally, payment options depends on credit history and the workings of the payment company.
Fuelled by pent-up demand and pandemic-inspired “revenge travel” – the desire to go bigger and better with splurge-worthy travel plans – the travel industry has been able to adopt the BNPL model to capitalize on people’s travel cravings.
“I doubt we will see at a simple return to the status quo,” said Ann Layton, owner of Siren Communications, a public relations firm that specializes in travel. “I believe people that have had many months to think about what they want from life will be seeking more meaningful, bucket list experiences.”
Throughout the United States and Canada, the platform Uplift has been instrumental in disrupting – and reviving – the travel industry by offering loans to travellers. Their model includes a quick application and instant decision and does not charge late fees or pre-payment penalties. By April, the BNPL company had partnered with airlines Southwest, Aeromexico, Air Canada, Alaska Airlines, Azul Brazilian Airlines, Frontier Airlines, and Porter Airlines. Last week, Uplift launched a new partnership with Air Tahiti Nui, as French Polynesia reopened to international travellers.
“With the reopening of this breathtaking destination it’s important we provide our customers every opportunity to travel again,” said Nicholas Panza, Vice President, the Americas for Air Tahiti Nui. “Uplift’s Buy Now, Pay Later Payment offering provides flexible monthly instalments and is a huge benefit to our customers making a dream vacation a reality.”
As the model gains popularity, we can expect more travel providers from around the globe to jump on board. But Uplift isn’t the only company to make the travel dreams come true to those on a budget. For example, Fly Now Pay Later is another player in the realm. The company offers financing options – from as little as zero per cent AP – to travel seekers, and has partnered with companies like Lastminute.com, TravelUp, and Malaysian Airlines to offer affordable(ish) trips to vacation seekers by the way of scheduled instalments.
Not surprisingly, credit card companies are jumping on board as well. American Express recently announced a new option for credit card users that allows them to purchase flights via BNPL options.
Use BNPL Responsibly
Of course – as in the case of any transaction involving borrowed dollars – the model must be used with caution. Otherwise, customers may find themselves having to cut back on essentials to pay what they owe for their breezy vacation. However, if it’s used responsibly, the model has the potential to revive hard-hit industries and give consumers something positive in these still-fragile times.
Not only does the BNPL model offer a chance to unwind and relax with an incredibly overdue vacation, but it also provides an attainable means for consumers to reconnect with families and friends (in person, that is) from around the globe. And that may just be the best part.