Want To Book A Flight But Pay For It Next Year? Here’s How It Works

Travel demand is still picking up, and so are the prices of flight tickets.

Surging prices are causing some to cut back on spending, but others are finding new ways to pay for their holiday plans.

“Consumers have grown accustomed to using ‘buy now, pay later’ in retail, and are now excited to be able to use it in travel,” said Tom Botts, chief commercial officer of BNPL firm Uplift.

But “this isn’t about giving consumers trips they can’t afford or encouraging them to take trips they shouldn’t,” he said. “This is about helping consumers actually budget and pay for these dream trips.”

“Implementing BNPL was part of AeroMexico payments evolution to offer our customers more comprehensive payment options,” said Daniel Vega, a director at AeroMexico.

Uplift is “100% focused on leisure travel,” said Botts. He added that consumers who use its services tend to spoil themselves when they can pay in installments.

“We see them buying premium economy or even first class [tickets] when typically they would not have bought that … Consumers are not buying the cheapest seats on the plane anymore,” he said.

“There have been layaway programs of various flavors in travel for a long time. But they were always predicated on the consumer being required to complete payment before they travel,” Botts said. “Some people don’t always understand that they don’t have to make all the payments before they travel.”

These companies work in several ways.

Some, such as Uplift, run a quick credit check on the traveler, which they use to determine interest rates and payment schedules. These are effectively short-term loans, which are decided in “literally a snap of a finger,” said Botts.

Botts said most of Uplift’s partners offer 0% financing. “In many cases, there’s not even a cost to the consumer to go ahead and take a seven-day cruise and pay for it over time,” he said.

However, rates vary according to the traveler’s financial health. Uplift’s annual percentage rates range from 0% to 36%, according to its website.

When asked about travelers who may cancel their credit cards before the loan is repaid, Botts said that’s “called fraud, and there are consequences.”

“By pulling out credit reports, we’re able to actually understand and ensure that the consumer has the financial wherewithal to actually pay us back.”

Others, such as a company called Pay Later Travel, work more like the classic layaway plan. There’s no credit check and no financing terms, but travelers must secure the flight with a deposit and pay the full fare before flying.

Still more, such as the BNPL company Splitit, authorize the full airfare amount on a traveler’s credit card, but split the payments between three and 24 monthly installments. With each installment that is paid, the company reduces the hold on the credit line by the same amount, according to its website.

Australia’s largest airline Qantas launched BNPL services in May 2022, which allows international passengers on select routes to book a flight but pay the fare later. However, the fare isn’t locked in — it can increase, along with changes in taxes and fees, according to the website.

Qantas also charges a fee to hold the seats, which is refunded if the flight is purchased or canceled, according to its website.