Few industries are as truly international as the airline industry, which means that currency conversion is something that airlines have to deal with almost constantly.

Whether flying from home or returning, consumers want to know exactly how much they are paying in a familiar currency. Multi-currency pricing is becoming increasingly common, although some airlines have attracted scrutiny for using poor exchange rates at the expense of the customer.

When purchasing flights, particularly from the most well-known airlines, users want to be able to assume that the payment process is structured to offer consumers a fair deal.

Ryanair has provided one notable example of how an airline payment process has gone awry, with their dynamic currency conversion system increases the cost of flights through unfavorable exchange rates.

We look at this in detail, alongside some other aspects to look out for when planning your travels.

Hidden costs

Given that airlines service people traveling across countries and continents every day, negotiating currency differences is a regular occurrence. The standard procedure would be to allow travelers, for example, those flying from Barcelona to London, to purchase their flights in the native currency.

In this case, flyers would be able to purchase their ticket from Barcelona in Spain’s currency of euros. This scenario would see the bank set the exchange rate.

However, Ryanair’s system altered this process. Its online booking system functions in a completely normal manner, but at the moment of payment, any foreign currencies are immediately converted into pounds.

At face value, this may not seem like an inconvenience. Yet this transition is often done at a poor exchange rate, rather than at the rate offered by the bank or credit card provider.

This procedure is not forced upon the customer, as there is an opt-out button. However, that is not necessarily easy to find, while opting out of Ryanair’s default exchange rates may sound like a risky move to the many people who aren’t confident with currency conversion. The most useful piece of consumer advice given by Which? on this topic is to always ensure that flights are paid for in local currency.

This means that banks will make the currency conversion, thereby cutting out any intermediaries to provide the most suitable exchange rate.

A wider trend

This phenomenon is not unique to airlines, as dynamic currency conversion has plagued holidaymakers in recent years.

Many hotels, restaurants and holiday attractions located in areas frequented by British tourists have begun to allow visitors to pay any credit card bills in pounds sterling.

This sounds like a tempting offer at first, as it allows consumers to budget with more confidence and has a clearer perception of value in their own currency.

However, there are pitfalls which may not be immediately clear. This option to pay in British currency often offers sterling at an unfavorable exchange rate, which causes the consumer to lose out.

That extra money is shared between the trader and the transaction’s go-between. Just as with purchasing airline travel tickets, holidaymakers should be cautious about services that take them away from local currencies.

Complex markets

Given the frequent instability of exchange rates, consumers need to be particularly cautious to ensure that they are receiving the most competitive rate. Fluctuations in exchange rates are not always a bad thing.

Forex trading, short for foreign exchange, is an increasingly popular venture for investors. Those who can anticipate market movements and spot trends can turn those exchange rate fluctuations to their advantage.

Top-Rated Forex Brokers offer a detailed guide as to how these forex markets work, which is essential given the complexity and volatility of currency trading.

Those who regularly trade in the forex market will have a more nuanced appreciation of exchange rates, but most holidaymakers will not want to concern themselves with analyzing currency trends when it comes to making payments overseas. 

Fortunately, most airlines handle currency conversion and multi-currency payments without any added expense for the consumer.

Multi-currency pricing

The majority of airlines will use the exchange rates given by bank or credit card providers, such as Visa or Mastercard.

These providers will have their own exchange rates, but at least there is the security of knowing that the most suitable rate for the consumer will be used. Those who travel abroad frequently will want to take exchange rates into account when choosing their bank or credit card provider.

Many airlines now offer multi-currency pricing, with Royal Jordanian announcing their move to this system in 2017 in order to give the consumer complete flexibility when it comes to making their purchase.

This allows travelers to view prices and make payments in the currency of their choice. Consumers can opt to make the payment in the local currency or an international currency of their selection. This means that there are no hidden costs from exchanging currencies at the moment of payment.

It is also advantageous from a business perspective. Multi-currency pricing allows airlines to tailor their websites for specific regions, thereby assuring online visitors from across the world that their custom is valued.

Moreover, the headache of worrying about currency conversion is removed, as consumers can work with whatever means of payment makes them most comfortable. Multi-currency pricing will likely become standard across all airlines in the coming years.

With all these factors at play, booking travel can suddenly seem overwhelming. But by taking into account the many variables, you can confidently make travel plans without adding unnecessary costs.