Travel TrendsBookings are dropped when FX fees reach 5% of the cost of a flight, according to Amadeus research.

Travellers resist high conversion fees, demand transparency in flight prices

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Travellers notice FX fees when it reaches 3% of total ticket price and drops the booking when it hits 5%.
Travellers notice FX fees when it reaches 3% of total ticket price and drops the booking when it hits 5%. Photo Credit: Gettyimages/Weedezign

Amadeus has discovered in its latest research that travellers tend to drop bookings when FX fees reach 5% of the cost of a flight. A high 89% of travellers are likely to choose one airline over another if given the option to pay in their preferred currency.

Using a dummy airline website, Amadeus worked with psychological research firm Innovationbubble to study travellers’ conscious and subconscious reactions to different levels of FX fees.

According to the research, travellers began to notice FX fees when they reached 3% of the total ticket price, showing strong resistance as the fee approached the psychologically important threshold of 5%. However, the overall cost of the flight remained the most important factor for securing a booking.

Over 86% of Indian travellers dropped bookings due to FX fees, with Japan travellers as the next highest at 74%, and China travellers at 69%. The 5,500 survey participants were regular flyers from the US, UK, France, Italy, Germany, Spain, India, China, Japan, Brazil, and Mexico.

Bart Tompkins, Managing Director, Payments, Amadeus said: “Travellers 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 travellers consider reasonable.”

Importantly, the research showed that 59% of travellers 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, travellers confirmed that on average, they now trust airlines more than banks to handle FX transactions on their behalf. Travellers in India, Japan and China trust airlines considerably more than banks.

“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 travellers demand,” concluded Tompkins.

Research results showed a clear indication that travellers want airlines to offer an end-to-end online booking experience.

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