Foreign exchange threshold deemed psychologically important for travel

Bart Tompkins, Managing Director for Payments at Amadeus

Globally, 89% of travelers are more likely to choose one airline over another when given the option to pay in a preferred currency. This shows the importance of transparent pricing.

A study from Amadeus reveals that hidden charges levied by financial intermediaries lead to travelers facing high charges for the privilege of paying in a currency they understand.

Amadeus surveys impact of FX on global travelers

More than a third of the respondents said that they have paid between 3-10% of the total cost of a flight in order to be able to make travel payments in their own currency.

Additionally, 14% have been charged more than 10% of the total flight cost for this option.

According to the research, the vast majority of travelers (76%) globally reported experiences with unexpected foreign exchange (FX) charges when purchasing a flight.

The majority (59%) of these global travelers would prefer that their airline handles currency conversion rather than a bank, with 43% stating that bank levied fees are too high.

Furthermore, travelers around the world confirmed the thesis that on average they currently trust airline companies more than banks to handle FX transactions on their behalf.

Amadeus finds less trust in banks by global travelers

The results for this global survey of 5,500 regular flyers includes respondents from India, China and Japan, and has been broken down below to provide better guidance.

26% of Indian travelers were reported to pay higher foreign exchange fees than other regions.

Globally, this phenomenon is averaging 14%, in Japan it’s at 22% and 20% in China. This indicates that travelers in India face higher foreign exchange fees than all other regions.

59% of travelers globally prefer airlines to offer exchange rates and provide a final local price rather than the banks, with India and China at 57% while Japan saw 59%.

Globally, flight buyers expressed a poor perception over services offered by the banks.

Concerned travelers were citing high bank fees (43%), obscure charges imposed by banks (33%) and concerns over the banks’ transparency on FX currency charges (23%).

Comments on Amadeus’ survey findings

Bart Tompkins, Managing Director for Payments at Amadeus said, “Travelers want a transparent shopping experience with flight prices displayed in their currency of choice.”

“The industry largely outsources currency conversion to financial intermediaries and this aspect usually leads to high fees that often exceeds reasonable traveler thresholds.”

Jamie Halliday, Director of Strategic Customer Insights at Innovationbubble gave insights.

“Whereas the overall flight price and product attributes remain paramount to clients, our research demonstrates that getting FX wrong can be a real turn-off for many travelers.”

“When the rate reached the 4-5% threshold, traveler’s alarm bells started going off and thus, they began to actively seek alternative travel options,” concluded Jamie Halliday.