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Flight-bookings provider Amadeus IT Holding SA fell the most in five years Tuesday after Deutsche Lufthansa AG imposed a 16-euro ($17.80) charge on external reservations, a move that targets the Spanish company’s main business.
Shares of Madrid-based Amadeus dropped 10 percent, the biggest slump since April 29, 2010. They were trading down 4.06 euros, or 9.8 percent, at 37.33 euros as of 12:51 p.m. local time, paring its market value to 16.7 billion euros.
Lufthansa’s move, announced on Monday, means outside bookers must pass on the charge, making their systems less competitive, or absorb it, thereby eating into margins. Europe’s second-biggest airline says flights sold via so-called global distribution systems cost it at least 100 million euros a year.
“The question will be whether other airlines follow,” UBS analyst Michael Briest said in an investor note. Amadeus has had a “difficult” relationship with Lufthansa and chose to absorb a 4.90-euro GDS charge from the German carrier in the past, before reaching a deal in 2010 that has now expired, he said.
Lufthansa was one of the founders of Amadeus in 1987 alongside Air France, Spain’s Iberia and tri-national Nordic carrier SAS.
The new levy will be added from Sept. 1, Lufthansa Chief Commercial Officer Jens Bischof said in a statement Monday, adding that the step is one of a number aimed at boosting margins from flights and halting the continuous decline in the percentage of revenue generated from ticket sales.
The Distribution Cost Charge won’t be applied to flights purchased via the websites of Lufthansa group airlines, or at airport ticket counters. Travel agents and corporate customers will also be able to avoid the fee by using online portals.
Amadeus said on its website that the Lufthansa policy will make comparison and transparency more difficult because travelers “will now be forced to go to multiple channels for the best fares.” People will pay more for the same service and information technology costs will increase, said Holger Taubmann, the company’s senior vice president for distribution.
This article was written by Chris Jasper from Bloomberg and was legally licensed through the NewsCred publisher network.