New Amadeus report highlights ‘psychologically important’ threshold for FX fees in travel

November 17, 2021

Last updated: November 23, 2021

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New research suggests travelers begin to abandon bookings when FX fees reach 5% of the cost of a flight 14% of travelers say they have paid more than 10% of a flight’s total cost in FX fees, often resulting from opaque fees levied by financial intermediaries

When booking flights, 89% of travelers would be more likely to choose one airline over another if given the option to pay in their preferred currency, highlighting the importance attached to transparent pricing. However, anew study from Amadeusreveals that hidden charges often levied by financial intermediaries mean travelers can face high charges for the privilege of paying in a currency they understand.

More than a third of respondents have paid between 3-10% of the total cost of a flight to make the payment in their own currency, with 14% having been charged more than 10% of the total flight cost. The vast majority of travelers (76%) reported unexpected FX charges when purchasing a flight.

Using a dummy airline website, Amadeus worked with psychological research firm Innovationbubble to study travelers’ conscious and subconscious reactions to different levels of FX fees. According to the research, travelers begin to notice FX fees when they reach 3% of the total ticket price, with ‘alarm bells’ beginning to ring as the fee approaches the psychologically important threshold of 5%. However, the overall cost of the flight still remains the most important factor for securing a booking.

Bart Tompkins, Managing Director, Payments, Amadeus said: “Travelers want a transparent shopping experience with flight prices displayed in their currency of choice. Today the industry largely outsources currency conversion to financial intermediaries and our research shows this can lead to high fees that often exceed the threshold travelers consider reasonable.”

He continued: “Airlines now have an opportunity to become fintechs, bringing FX services in-house so they can set reasonable fees and deliver an improved digital shopping experience, with the choice and transparency travelers demand.”

According to the research, the majority (59%) of travelers would prefer their airline to handle the currency conversion rather than a bank, with 43% stating that bank levied fees are too high. In addition, travelers confirmed that on average they now trust airlines more than banks to handle FX transactions on their behalf.

Jamie Halliday, Strategic Customer Insights Director, Innovationbubble added: "Whilst the overall flight price and product attributes remain paramount, our research demonstrates that getting FX wrong can be a real turn-off for travelers. When the rate reached the 4-5% threshold, people’s alarm bells went off and they began to actively seek alternative travel options.”

Clickhereto download a full copy of the report.

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About the research:Amadeus commissioned independent quantitative and qualitative research to better understand traveler perceptions and their emotional response to FX fees and services.

International Flight Buyer Survey:5,500 regular flyers from the US, UK, France, Italy, Germany, Spain, India, China, Japan, Brazil, and Mexico were surveyed to expose the number of consumers experiencing unexpected FX charges when booking a flight, the impact on their experience, and how it affects their choices.

Psychological Study:Professional psychologists from Innovation Bubbles interviewed 29 survey respondents based in Brazil, Germany, the UK and US. Interactive booking demos were used to determine what influences consumers’ perception of FX rates when booking an international flight ticket and their emotional journey at the online checkout.

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