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Tired of the fees it pays to distribution companies such as Amadeus, Sabre and Travelport, the Lufthansa Group announced that beginning September 1 it will charge consumers and travel agents an extra $17.80 (16 euros) per ticket for flights booked beyond Lufthansa Group websites, service centers and airport ticket counters.
The Lufthansa Group, including Lufthansa, Austrian Airlines, Brussels Airlines and Swiss, will not level the surcharge for consumer, travel agency and corporate bookings that take place through the airlines’ channels — although that would entail new technology costs for the travel agencies and corporations.
If history is a guide, Lufthansa’s action will trigger an intense backlash from the likes of Amadeus, Sabre and Travelport, and retaliatory measures could be put in place.
In the U.S., Northwest Airlines tried a similar approach in 2004 but withdrew the idea under pressure.
“Until now, the percentage of revenue generated from the sale of flight tickets by our airlines has continuously decreased,” said Jens Bischof, chief Commercial Officer of Deutsche Lufthansa AG. “While other service and system partners in the value chain are recording increasing margins and returns, our airline’s earnings have been compromised over time, even though they are the actual providers of flight services. We want to counteract this trend by refocusing our commercial strategy.”
Lufthansa complains that its fees are rising and that its airlines are forced to pay fees to the global distribution systems for services, such as combining and booking global, multi-airline offers, that are only “partly used.”
Consumers will be subjected to the surcharge when booking tickets on online travel agency sites, all of which use global distribution systems to access flights. Lufthansa states these sites will always display the full fare.
It is a hassle for travel agencies and corporations with Lufthansa contracts to book flights through Lufthansa Group sites as they would have to alter their workflow and don’t get analytics and reports they require.
Lufthansa is developing a way for travel agencies and corporations to connect directly to Lufthansa sites through IATA’s New Distribution Capability, and they could thereby bypass the global distribution systems. The technology is under development, unproven and will meet substantial resistance from travel agencies, corporations and the global distribution systems.
Amadeus issued the following statement about Lufthansa’s moves:
“Amadeus believes that the traveller is at the heart of the travel industry. Travellers 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 penalise travellers based on the shopping channel they use. Travellers 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 traveller, putting the travel agent, and/or the end consumer, at a disadvantage.
“Also, this new model will make comparison and transparency more difficult because travellers 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.
“As always, Amadeus remains open to working with all its partners and customers to serve the best interests of the traveller and the industry.”