British Airways Adds a Fee That Could Weaken Airline-Ticket Middlemen
Skift Take
Skift anticipated that British Airways and Iberia would copy Lufthansa's pioneering move to push middlemen further out of the distribution chain. But the move is still eyebrow-raising because it defies two years of predictions by the distribution systems that Lufthansa's effort would fizzle out.
British Airways plans to add a surcharge on some tickets, a move that could help reset airline relationships with the powerful global distribution systems.
On Friday, International Consolidated Airlines Group (IAG), parent company of British Airways and Iberia, said that it will add a fee of £8 (about $10.63) per leg of a trip on tickets that are booked through the three largest middlemen for distributing tickets to travel agencies: Amadeus, Sabre, and Travelport.
Skift reported in March we expected a move like this from the airline group.
IAG's new surcharge, which goes into effect November 1, follows a pioneering move by Lufthansa in September 2015, when the German flagship carrier was the first to risk the ire of travel agents and implement a surcharge of 16 euro (about $17.80) on bookings that weren't direct. Northwest Airlines, which merged with Delta, tried something similar in 2004 but never went through with it because the backlash was too great.
The British Airways and Iberia decision comes during the same period that IAG is negotiating with Amadeus, one of the travel technology distribution platforms, over the renewal of its multi-year distribution contract. It isn't clear then if the move is an IAG negotiating tactic or if the airline group would implement the fee in November.
The airline industry has been watching Lufthansa Group's steady performance since summer 2015, when it launched a major investment and commercial effort in direct-booking connections with the corporations and travel agencies that buy high volumes of its tickets.
After Lufthansa added its fee on bookings through the global distribution systems, many industry watchers expected Lufthansa Group to lose market share by having made these tickets more expensive than competitors' fares.
But in recent months Lufthansa Group has said that it has not seen an overall loss, thanks in part to its having signed up companies like Siemens to book tickets directly through the airline and to skip the fees charged by third-party distributors like Amadeus.
Amadeus estimates those surcharges to average about 2 percent to the cost of a ticket. and says that the fees airlines pay the distribution systems have been declining over the years.
By pushing direct connections to travel agencies, Lufthansa and now IAG are prompting many travel management companies), other travel companies, and aggregators to develop or secure "middleware" to bypass the established distribut
