Skift Take

Lufthansa-type surcharges usually turn out to be a negotiating tactic in a bid to get a better deal from the all-powerful global distribution systems. Smart money says this battle will turn out in a similar way. Meanwhile, airlines around the world are watching this keenly to see who beats up on whom.

The Lufthansa Group is poised to begin leveling a surcharge on September 1 on flight bookings that take place outside its channels and the Group, including Lufthansa, Austrian Airlines, Brussels Airlines, and Swiss, shows no signs of retreating from the fee.

Speaking in Frankfurt on July 30 during Lufthansa Group’s first half of 2015 call with analysts, CFO Simone Menne said the Group still considers the 16 euros (currently about $17.62) surcharge “a very good strategic move.”

Asked by an analyst how the surcharge would begin to impact yields in the fourth quarter, which is the first quarter that it would be fully in place, Menne said: “We see, as you say, there will be ups and downs and we think it will remain broadly neutral. Yes, there is a risk to lose some passengers but they will be compensated by the higher payments in the other areas.”

Menne obviously meant that the Lufthansa Group airline would recoup the potential loss of some market share through the higher payments for flights that come through online travel agencies, traditional travel agencies and the global distribution system channel.

“As you rightly say, we think it is a very good strategic move and we feel it is very good and important that we did that move,” Menne said.

Lufthansa Group is imposing the surcharge as a counter to what it considers to be exorbitant global distribution fees and — barring a last-minute settlement — can expect a backlash and penalties from Sabre, Amadeus and Travelport when the fee kicks in.

Travel management companies and Lufthansa corporate clients are scurrying to deal with and track the surcharges.

At the Global Business Travel Association conference in Orlando last week, speakers blasted the Lufthansa fee, arguing that it amounts to a fare hike without adding any customer value. The Lufthansa fee and the proliferation of sharing economy bookings from apps such as Uber, Lyft and Airbnb were themes that dominated the conference.

Travel and expense company Concur is offering a solution that would enable business travelers to secure their Lufthansa negotiated rates when booking on Lufthansa consumer sites, thereby avoiding the surcharge.


The Daily Newsletter

Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.

Have a confidential tip for Skift? Get in touch

Tags: lufthansa

Photo credit: The clock is ticking as the Lufthansa Group is set to impose a fee on flight bookings that take place outside its own channels beginning September 1, 2015. Pictured is Lufthansa's Apple Watch app. Lufthansa Group

Up Next

Loading next stories