Apple Pay's 'Airplane Mode' Charts a Cautious Course

Apple Pay has begun its foray into airlines, deploying about 3,500 iPad minis that can accept mobile payments, but it is making a slow approach to the industry.

JetBlue is deploying Apple Pay on flights to sell food, drinks and seat upgrades, but for now the implementation is somewhat fragmented. Apple Pay will initially be available on transcontinental flights and should be available on all JetBlue flights by June. The airline plans to flesh out the experience by adding support for baggage handling fees and developing a tablet-specific product to unify the consumer and staff interaction.

There's also the question of consumer awareness. The use of mobile payments on board airplanes is still relatively low; WorldPay estimates the number of airlines offering on-board mobile payments was 5% in 2014, though that number is expected to increase to 36% by 2016.

Nevertheless, JetBlue says Apple Pay already addresses a pain point of in-flight payments.

"People often don't have their wallets with them while they are flying, so they have to rummage through their carry on to find their wallet and cards or cash," said Blair Koch, vice president of IT for the Queens, N.Y.-based JetBlue.

The new system uses iPads equipped with Infinite Peripherals' Infinea Tab M to accept payments from credit cards and iPhones in airplane mode. The iPads replace the older, more cumbersome handheld payment terminals that flight attendants sometimes struggled to use. "The old terminals didn't weigh as much as a brick, but they were about that size," Koch said.

Airlines have attempted to bring mobile payments to the skies for years, and have also used mobile technology to combat fraudulent use of loyalty programs. Fraud was also an early challenge for mobile payments on-board airlines.

Even with the marketing muscle of Apple behind this initiative, adoption will be slow, said Gareth Lodge, a senior analyst at Celent's banking group.

"While attention-grabbing, I suspect at the moment that's all it is," Lodge said. "The number of people who are able to use Apple Pay are very small, and the number of those who are using is even smaller. That's not a criticism of Apple. Critical mass takes time to build."

But as more planes adopt WiFi, "joining the dots will become easier and more powerful," Lodge said.

Apple did not provide comment for this article.

Mobile payments should increase on-board in the future because the airlines are offering more reasons to use the technology, said Richard Keever, the director of sales for Infinite Peripherals.

"For years airlines offered just free meals, but now they're offering all sorts purchases on board; it's a big revenue generator," Keever said, adding the purchases also reveal data about passengers' spending patterns. "There's a lot of data that's not getting analyzed. You can find out if there are certain items purchased on certain routes, for example."