New report reveals threshold for acceptance of exchange rates when buying tickets

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New report reveals threshold for acceptance of exchange rates when buying tickets
Source: Twitter @AmadeusLatam
November 19, 2021

An Amadeus study indicates that travelers start to abandon reservations when currency exchange rates reach 5% of the cost of the flight

14% of travelers claim to have paid more than 10% of the total cost of a flight in exchange fees, often derived from the opaque fees charged by financial intermediaries

When booking flights, 89% of travelers would be more willing to choose one airline over another if they were given the option of paying in their usual currency, which highlights the importance of transparency in the prices. However, a new Amadeus study reveals that hidden surcharges commonly applied by financial intermediaries cause travelers to face high fees for the privilege of paying in a currency they know.

More than a third of those surveyed have paid between 3 and 10% of the total cost of a flight to make the payment in their own currency and 14% have been charged more than 10% of the total cost of the flight. The vast majority of travelers (76%) reported experiencing unexpected currency exchange charges when purchasing a flight.

Using a fictional airline website, Amadeus worked with the psychological research company Innovation Bubbles to study the conscious and subconscious reactions of travelers to different levels of foreign exchange fees. According to the research, travelers begin to notice currency exchange fees when they reach 3% of the total ticket price, and the "alarm" begins to sound when the commission approaches the "psychologically important" threshold of 5%. However, the total cost of the flight is still the most important factor in securing a reservation.

Bart Tompkins, Director, Payments, Amadeus, said: "Travelers want a transparent shopping experience with flight prices listed in their chosen currency. Today, the industry largely outsources currency conversion to financial intermediaries and our study shows that this can lead to high commissions that often exceed the threshold that travelers consider reasonable ”. 

And he continued: "Airlines now have the opportunity to become fintechs, incorporating currency services into the company to be able to establish reasonable rates and offer an improved digital shopping experience, with the possibility of choice and the transparency that travelers demand" .  

According to the research, the majority (59%) of travelers would prefer that their airline handle the currency conversion rather than a bank, and 43% say that the fees charged by banks are too high. Additionally, travelers confirmed that, on average, they trust airlines more than banks to handle currency transactions on their behalf. 

Jamie Halliday, Strategic Customer Insights Director, Innovationbubble, added: "While the overall price of the flight and product attributes remain paramount, our study shows that getting the wrong currency rates wrong can be a real shock to travelers. When the exchange rate reached the 4-5% threshold, people's alertness soared and they began to actively seek alternative travel options".   


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