Sabre CEO “Confident” in Wake of Lufthansa’s Surcharge Plan
by Michele McDonald /Sabre Corp.’s CEO said he is “confident that our business will be fine,” despite Lufthansa’s announced intention to impose a €16 ($18.70) surcharge on GDS bookings beginning Sept. 1.
Tom Klein told a Nasdaq investors’ conference in London that “We have an announced action, and nothing else has happened yet.” Lufthansa, which represents about 2.5% of Sabre’s GDS business, is “doing what airlines do” when they signal a price increase, he added.
And Lufthansa would have good reason to rethink its plan, Klein said.
“I would suggest a carrier like Lufthansa, and maybe specifically Lufthansa, gets as much or more value from GDS services as any airline in the world. They get about 70% of their revenue through the GDS.”
The carrier has “a better mix than most airlines” of point-of-sale business. “Their airplanes are full of a United Nations of customers,” Klein said.
“In markets where they’re not strong, they still have good brand recognition.” In contrast, U.S. airlines fill their planes with Americans, he noted.
Staying competitive?
For Lufthansa, the cost of servicing customers is very high due to high labor costs and other factors, according to Klein.
“Servicing customers is not what they are set up to do,” he said. “Taking phone calls is not good business for Lufthansa.”
Yet Lufthansa is saying, “We’re going to take an action that will make our fares higher for our best customers,” Klein said. “That’s a tough position to take. I expect they’ll want to stay competitive.”
Klein said the saga will likely play out over the summer and will not be resolved until September.
He said Sabre takes Lufthansa’s announcement seriously, but “we have haven’t seen a technical solution” from the carrier that would address the issues associated with such a move.
Asked whether he thinks rumors that Air France is considering a similar strategy could signal a trend, Klein said, “I don’t.”