Airport profits from bureaux de change have risen to more than £100 million while exchange rates have tumbled below one euro to the pound, an investigation has found.
Passengers at British airports get worse rates than those at European hubs as Heathrow and Gatwick drive up rents and strike exclusivity deals with foreign-exchange operators.
More than five million people are expected to fly from British airports this Christmas, with almost 250,000 travelling through Heathrow on its busiest day. One in ten travellers buys currency from their departure airport.
The average rate at 20 British airport bureaux de change surveyed by The Times over the past three months was 13 per cent worse than the market exchange rate. Travellers can get a better deal at European airports, where profit margins are a quarter lower on average. The difference from the market exchange rate at Danske Bank at Copenhagen airport was only 3 per cent, compared with an average of 12.5 per cent at Heathrow and 15 per cent at Stansted.
The worst rate was at Southampton airport, where Moneycorp was offering 95 cents to £1 compared with a market rate of €1.18 to £1.
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Ian Strafford-Taylor, of the online currency exchange FairFX, said: “Over the last three months, airport rates have been as much as 26 per cent different [from the] market rate, which is nothing short of shocking. Airports are clearly taking advantage of their captive audience of holidaymakers and business travellers.”
Airports do not set currency exchange rates but Heathrow and Gatwick earned £76 million from rents charged to bureau de change operators last year, with revenue rising by almost 20 per cent in the past two years. Over the same period, revenue from duty-free shopping grew by only 1.5 per cent. Heathrow alone generated £53 million from its 33 bureaux de change, £1.6 million per kiosk each year. Costs run at less than 5 per cent of revenues, according to the airport’s accounts.
Bureau de change operators say their profit margins have been squeezed by rent rises. In July last year, Travelex’s UK operation won the contract to become the sole bureau de change provider at Heathrow, contributing to a loss of £3.4 million for the company. Its accounts note: “The operating loss is a function of the increased rent due to the successful contract renegotiations of an airport location.”
The average rate offered by Travelex at Heathrow was €1.02 to the pound, 12.5 per cent worse than the market exchange rate. In 2010 it was offering rates 11 per cent below the market rate.
Last year Mark Horgan, chief executive of MoneyCorp, said: “We make very little money in the airports, they are largely a big rent bill for us.” Bureaux de change are still keen to operate in airports because it can boost turnover, allowing them to buy more competitively amd raising their profile.
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The combined income of the UK’s other major airports, such as Manchester, Stansted and Bristol, is much bigger than that of Gatwick, suggesting they are collectively making at least £25 million from foreign exchange operators — meaning that total profits from bureaux de change were more than £100 million last year. A Gatwick spokesman said: “Our foreign exchange provider — Moneycorp — incurs higher costs as, unlike high street outlets, they are open and staffed 24 hours a day and hold substantial volumes of more than 50 currencies. For customers who are able to pre-order currency for collection, we can offer rates that are among the best anywhere in the country.”
Heathrow said its rates were better than at Schiphol, Charles de Gaulle and Frankfurt. It said that the rise in revenue was not representative of a trend. A spokeswoman added: “We are confident that Travelex provides competitive rates at Heathrow compared with the UK and internationally.”
