Lufthansa to Add Hefty Surcharge to GDS Bookings
by Michele McDonald /Lufthansa Group Airlines will add a €16 ($17.80) surcharge to every ticket booked by a channel using a GDS, beginning Sept. 1. The new “Distribution Cost Charge” (DCC) will apply worldwide.
The group includes Lufthansa, Swiss, Austrian Airlines, and Brussels Airlines.
The DCC will apply to travel agency bookings made through a GDS and to consumer bookings made through an online agency that uses a GDS for air bookings.
The DCC will not apply to any bookings made on Lufthansa’s direct channels, including the group’s own websites – LH.com, swiss.com, Austrian.com and brusselsairlines.com – and the ticket counters and service centers at airports.
Travel agents can use LHGroup-agent.com, and corporate customers will be able to book their negotiated contract rates at LH.com.
Lufthansa said customers “can of course count on continued fare transparency. The display of the ticket will always show the final fare.”
Jens Bischof, chief commercial officer of Lufthansa, said the company is seeking to reverse a trend in which its revenue from the sale of airline tickets has decreased while “system partners in the value chain are recording increasing margins and returns.”
Angry reaction
Amadeus lashed out with an angry statement: “Travelers today are looking for consistency, transparency and choice across all channels, and we as an industry can deliver that best by connecting and integrating all players. LHG have chosen to go in a different direction by introducing charges that will penalize travelers based on the shopping channel they use.”
One way or another, the traveler will likely be paying more, Amadeus said.
“Travelers will either pay more for the same service or, in the case that travel agencies are forced to accept this new commercial strategy by modifying the way they access content just for LHG, there will be extra IT costs that may ultimately be passed on to the traveler, putting the travel agent, and/or the end consumer, at a disadvantage.”
Transparency: ‘more difficult’
And despite Lufthansa’s protestations to the contrary, Amadeus said, the new model “will make comparison and transparency more difficult because travelers will now be forced to go to multiple channels to search for the best fares. Ultimately, the industry overall stands to lose from this distribution model.”
Travelport issued a statement saying, “We believe this proposed surcharge is not in the interests of either the end-traveler or the airline group. We continue to remain focused on providing our travel agency customers worldwide with the broadest possible travel content and providing our airline partners with cost-efficient and highly effective global distribution.”
And Sabre said, “We stand ready to work with airlines globally that wish to sell and retail their products through Sabre. Lufthansa’s proposed ‘cost distribution charge’ disadvantages consumers and travel agencies. The GDS is the most preferred and efficient channel for consumers and travel agents to shop, book and manage travel, and provides consumers with transparency, choice and the ability to comparison shop.” Sabre added that it expects to find a “mutually beneficial solution for both Lufthansa and our agency customers.”
Doing battle. . . again
Amadeus, the largest GDS operator in Germany, has fought this battle before.
In 2008, Lufthansa said it would raise fares by €15 each way for flights departing Germany and Austria and booked through GDSs.
Agents could book the pre-hike “Preferred Rates” through a GDS only if they agreed to pay a fee of €4.90 plus VAT per coupon.
Sabre and Travelport, which had less exposure in Germany, made deals with Lufthansa before the plan took effect, but Amadeus fought on and reimbursed agents for the surcharge.
It took two years for Amadeus and Lufthansa to make peace.
Not well-served?
In its latest shot across the GDS bow, the Lufthansa Group said its “innovative ancillary services and enhanced price options” are not well served by “existing sales systems,” which “cannot adequately display the individual offers with their variety of product components.”
But Travelport noted that airlines in the Lufthansa Group are “taking advantage of our suite of industry-leading merchandising solutions.
These solutions allow airlines to connect to us and display and retail all of their content, including their ancillary content, in a flexible way that meets their business needs.”
Lufthansa, a major proponent of IATA’s New Distribution capability, said it is developing “a new booking method to enable sales partners to connect to their IT systems directly based on the new IATA data standard.
The first NDC pilot project is currently being tested at Swiss and should begin at Lufthansa during the course of this year.”