Air Arabia, the UAE's only listed airline, has announced that it will start accepting the UAE-regulated stablecoin, AE Coin, as payment for flight bookings amid the shift to digital currencies.
The Sharjah-based airline has teamed up with the UAE’s digital bank Al Maryah Community Bank (Mbank) to enable the use of AE Coin payments through the AEC Wallet App, it said in a statement. It claims to be the first airline in the Middle East to allow air travel payments with stablecoin.
In December, AE Coin, the first regulated digital currency in the UAE, was granted final approval by local authorities. Scheduled to be launched soon, AE Coin is pegged 1:1 to the UAE dirham.
“The newly introduced payment option through AEC Wallet reflects our ongoing efforts to adopt smart solutions that bring greater value, choice and flexibility to our growing customer base,” said Adel Ali, Air Arabia’s group chief executive.
Stablecoins – which are pegged to a fiat currency – tend to be less volatile than, say, Bitcoin, where swings are influenced by everyday factors such as tweets. They are grounded being tied to a currency, or liquid reserves including government treasuries, or commodities such as precious metals.
In March 2023, the UAE Central Bank began implementing its digital currency strategy, Digital Dirham. Last year, its regulation on stablecoins indicated the bank would establish a clear operational framework for cryptocurrencies when implemented.
Last month, Abu Dhabi entities IHC, ADQ and First Abu Dhabi Bank said they plan to launch a dirham-backed stablecoin, which will be fully regulated by the Central Bank, aimed at easing payment solutions.
“By integrating AE Coin into flight bookings, we are simplifying the payment experience for travellers and enabling a seamless cashless solution that aligns with the growing digital economy,” said Ramez Rafeek, general manager of AE Coin.
Air Arabia’s adoption of digital payment solutions within the aviation industry will set the stage for a wider adoption of digital currencies in the region, he added.
The airline said for travellers to use AE Coin for their next Air Arabia booking, they need to download the AEC Wallet app from the App Store or Google Play, create an account, verify their identity, then top up the wallet via their Mbank account or other supported payment methods.
The stablecoin's dirham peg will ensure price stability, security and low transaction fees, Air Arabia said.
The move provides a degree of “consumer confidence, knowing that unlike other digital currencies, this one is backed by the UAE Central Bank and has less likelihood of erratic valuation fluctuations”, Saj Ahmad, chief analyst at StrategicAero Research, told The National.
“The thing to note here, though, is the attached fees. There will need to be greater incentivisation for customers to use AE Coin when booking flights because customers who are adept at online banking and purchases can also opt to simply buy their flights direct with Air Arabia and pay the cost of whatever their flight is without additional fees,” he added.
The use of stablecoins continues to grow. An estimated $208 billion worth will be in circulation this year, a 28.4 per cent jump from 2024, according to Visa and its data partner Allium.
