Payment companies are already pouncing on the business opportunities in the sector. China Payment and Remittance Service Co (China PnR) has teamed up with China Southern Airlines to build up the carrier's online payment system and its call center, where clients can buy tickets with one call.
China PnR is also teaming up with ticket agents to boost its revenue. In mid-July it signed a deal with Zhong Hang Xin Gang Guarantee Co as strategic partners, seeking more cooperation on airline ticket e-payments.
The two parties offer credit to ticket agents. When agents run short of capital, China PnR will pre-pay the money on behalf of agents to airliness. Zhong Hang Xin Gang, the dominant airline tickets guarantee company in China, works as the guarantor.
In the industry, agents normally get tickets from airlines and then pay the money back to carriers after selling tickets to travelers.
Zhong Hang Xin Gang acts as a guarantor and is widely respected in the industry.
"Agents are facing two challenges this year - tight monetary policy and the economic slowdown," said Jerry Zhou, chief executive officer of China PnR.
Zhou and his team set up China PnR in 2006 after leaving an affiliate of China UnionPay, the sole bank card transaction company in China.
Zhou and his team have forged good relationships with banks with their UnionPay experiences.
Most ticket agents are small and medium enterprises. The tighter reins on bank lending put SMEs in the frontline of stricter economic controls.
"SMEs are being particularly hit by the loan restrictions - large firms are more important customers and thus still receive privileged treatment, and banks prefer longer-term financing because of the larger spread at the long end," said Standard Chartered in a recent research note.
"SMEs, in contrast, tend to rely on external funding for cash flow, and even the profitable ones will be finding things hard at present."
(Shanghai Daily July 30, 2008)
