Assuming you haven’t been living under a rock this past week, you will most certainly have heard the news of UATP – a payment network for most of the world’s airlines – integrating Bitcoin as a payment option. Before everyone gets their hopes up, you have to keep in mind that it is still up to the airlines themselves whether or not they will actually use the Bitcoin option in the future, similar to how Paypal’s Braintree works.

Strategic Partnership to Unite Airlines with Bitcoin

It has to be said though, the partnership between UATP and Bitnet – a payment processing platform for Bitcoin transactions – is a rather strategic one. Considering how UATP merchants provide services to roughly 95% of airlines around the world, it could prove to be an interesting market for Bitcoin integration assuming the airlines decide to use the option.

Even though popular travel website Expedia is already accepting Bitcoin payments since 2014, it was only a matter of time until more people started to take notice. And with airlines such as Lufthansa and British Airways making use of UATP to process payments, we can only hope that at least one of these major airlines starts accepting Bitcoin in the near future.

Bitcoin provides both the sender and the recipient with low to non-existent transaction fees, which is enough of a reason in its own right to at least consider accepting bitcoin payments. Especially when taking into account how credit cards, paypal and even bank transfers are the subject of fraudulent transactions on a regular basis, Bitcoin is a worthy alternative – if not better than all traditional payment methods in existence today.

The airline industry could prove to be an untapped market for Bitcoin, as most airlines are doing everything they possibly can to lower overhead and expenses. Whether they have to route flights differently, or even fire 10% of their personnel, there always seem to be far too many costs involved. Bitcoin could easily help to reduce costs by a significant margin.

A little known fact is how little profit the airline industry makes a year. Even if it’s a pretty busy year, global profit margins will hardly exceed the 1.5% rate, which is next to nothing from a business point of view. On top of that, airlines have to deal with international customers all the time, which also means that foreign currency needs to be exchanges – which in turn also adds even more costs.

Bitcoin could solve this issue as well, as the currency can be used globally without losing any of its value by sending it to a person in a different country. Not only will this remove the hassle of dealing in different currencies, but it also removes any costs associated with these currency exchanges. Overall, this would benefit both the airline companies and their customers, making it a win-win situation.

Instant Conversion of Bitcoin to Fiat

As much as we all would love to pay for our flights with Bitcoin, there is one major downside to this option as well. Bitnet, like most Bitcoin payment processors, lets retailers convert BTC payments to fiat currency immediately. It is safe to assume that nearly every airline accepting Bitcoin payments would choose to do so, dumping a ton of BTC on the open market on a daily basis.

While this process would create a nice flow of liquidity for Bitcoin exchanges, it can also heavily impact the BTC price in a negative way, as there is an excess of Bitcoin to be sold. However, as people can book their flights with Bitcoin [cheaper than with conventional payment methods] the demand for Bitcoin could increase, and potentially even nullify the amount of Bitcoin being dumped.

Even though the UATP news is a major step forward for the branding of Bitcoin, there is no reason to get all excited about this announcement until one of the major airlines actually starts using the payment option.

Source : http://www.economist.com/blogs/gulliver/2015/02/booking-flights-bitcoin