In a letter to its travel advisor partners on Monday, Lufthansa announced that starting Oct. 1, 2020, it would be upping its GDS fee for its group of airlines by 30%, from $16 to $21. The reason for the increase, Lufthansa said, is “the increase in GDS costs since the introduction of the DCC in September 2015.”
In a message on Tuesday, ASTA’s SVP of industry affairs and education Mark Meader reacted to the news. Meader said that, while the Lufthansa GDS surcharge, first introduced in 2015, was meant to address the higher cost of distributing tickets through the GDSs, it has simply passed a rising cost along to consumers.
“The GDS surcharge… was meant to address higher costs incurred by the carrier to distribute its air product through the GDSs (according to carriers) versus other options such as booking directly through the airline’s website. While controversial in nature, the distribution surcharge was meant to cover the asserted cost difference created by the GDS model when compared with corresponding costs of the particular carrier’s direct sales options,” Meader said.
Meader went on to say that the introduction of IATA’s NDC, also starting in 2015, was meant to provide an acceptable cost-effective alternative for carriers. Instead, the use of NDC products, which are all in “various stages of readiness,” will also include an airline-imposed surcharge bookings, “something many in the industry were lead to believe would no longer be the case once a GDS became fully NDC capable.”
“In the meantime, the Lufthansa Group has decided to raise its corresponding surcharge for those tickets issued by a GDS ostensibly due to GDS cost increases,” Meader said.
“In either case, the cost for air travel for the end consumer will undoubtedly increase with the traveler likely to bear the brunt of that cost or surcharge increase. Fortunately, the value of the travel advisor, especially during times of stress and disruption as caused currently by the Coronavirus pandemic, continues to grow in meaning and importance to the traveler as well as many airline and other travel suppliers.
Meader and ASTA is encouraging all suppliers, not just airlines, to keep costs low to recognize “both the value of the traveler and the travel advisors consumers’ trust.”
The original increase in 2015 was one of the most heavily debated issues from that year, with a lot of concern coming from agencies that the surcharge would set the standard in the industry and other carriers would follow. Lufthansa CCO at the time, Jens Bischof, said during a media conference call that “we believe the market is ready for this change” and that “somebody’s got to do it.”
No other major North American carrier has since replicated Lufthansa’s fee and Lufthansa was eventually the subject of an assessment from the European Commission, the executive arm of the European Union (EU), about complaints by agencies and CRS providers.