Airlines face a huge loss of revenue due to currency conversion
A study by Outpayce warns that airlines lose nearly $2 billion annually because currency conversion is handled by banks. Offering prices and payments in the passenger's currency not only improves the buying experience but could also generate up to $9.6 billion in additional revenue per year
An economic study reveals that allowing passengers to pay in their preferred currency can double the profitability of a ticket and open up a multi-million dollar opportunity for the sector. Adopting multi-currency pricing would allow airlines to recover revenue that currently goes to financial intermediaries.
A new analysis commissioned by Outpayce from Amadeus and conducted by the Centre for Economics and Business Research (CEBR) found that approximately 40% of tickets purchased on airline websites are cross-currency sales. In most cases, the necessary currency conversion is handled by the passenger's bank in the background, depriving airlines of a direct, high-margin revenue stream.
Some pioneering companies have already implemented systems that allow travelers to choose to pay in their local currency, improving the booking experience and generating incremental revenue through conversion. According to the study, if all airlines adopted the Multi-currency Pricing (MCP) model, the sector could add an additional $1.74 billion annually at current participation rates. If all passengers opted to pay in their own currency, the opportunity would scale to $9.6 billion per year. Incentives such as loyalty points could further boost adoption.
The greatest opportunities lie in Asia-Pacific (APAC) and Europe, the Middle East, and Africa (WEMEA), where currency diversity generates a high volume of cross-border transactions. In APAC, the opportunity could reach up to $3.809 billion with full participation; in WEMEA, $2.616 billion; in North America, $1.448 billion; in Northern, Eastern, Central, and Southern Europe, $1.034 billion; and in Latin America, $741 million.
Damian Alonso, Head of Product and Partnerships at Outpayce, explained that there is significant demand for currency exchange services and that airlines currently capture only a tiny fraction of this market. He pointed out that displaying prices in currencies travelers don't understand leads to abandoned bookings, while multi-currency solutions improve the experience and generate new revenue.
SriLankan Airlines, one of the first to implement this system, confirmed that its FX Box Multi-currency Pricing service ranks among its top five best-selling ancillary products, second only to upgrades and baggage and seat services. Its Digital Commerce Manager, Bimali Malalasekara, emphasized that FX is a beneficial service for both airlines and passengers, and that transparency in the charged margin is key.
Owen Good, Head of Economic Advisory at CEBR, highlighted that the conversion margin can have a significant impact on profitability. While IATA estimates an average profit of USD 7 per passenger this year, the analysis calculates conservative margins of between 2.75% and 3.63%, demonstrating that FX can double the profitability of many tickets when passengers choose this service.
The full Outpayce report details the global economic opportunity, based on real industry data provided by Outpayce and Amadeus Business Consulting, and on acceptance rates from pioneering multi-currency airlines.
Source: Outpayce / Amadeus.