Lufthansa Ratchets Up Pressure on Sabre Over Travel Distribution

“The purpose of a business is to create a customer," said Peter Drucker, the late king of the management gurus. In that vein, travel technology companies told airlines to "make customers, not war." But Lufthansa Group hasn't listened. This year it has fought the tech companies by withdrawing some content from them, introducing incentives to agents who bypass them, and pursuing in Texas state court compensation this fall for a separate set of fees it doesn't believe one of those middlemen, Sabre, should charge it. Since the summer of 2015, Lufthansa Group has fought a low-grade war on the main distributors of its airline content to travel agencies, namely, Amadeus, Sabre, and Travelport. Lufthansa Group added an $18 (€16) surcharge on tickets booked through the tech middlemen. The airline group claimed the middlemen were hindering it from wooing new passengers and selling more effectively to the flyers it already serves. The companies disagreed. In January, the airline group said it had shifted about 10 percent of its airline content out of Amadeus, Sabre, and Travelport and into its direct connection channels since it started its effort two years earlier. Significant money is at stake. Lufthansa Group will pay more than $570 million in fees to Amadeus, Sabre, and Travelport this year, analysts estimate. The German company claimed in a report that its "direct-connect systems are far less expensive, costing a fraction of what it costs to book flights through legacy global distribution system channels." Lufthansa Group claimed its effort had a "neutral" effect on its overall bottom line so far. Here's a recap of this year's skirmishes. New Incentives for Agents This year Lufthansa introduced a $1.15 (€1) incentive on every booking for qualifying agents who sign up for its online portal before the year-end. That move represented its first financial incentive to agents in many years. In January 2018 it will start paying $1.15 (€1) for each flight that agents book using new technical standards via a type of connection that Amadeus and Sabre do not have a commercial agreement with the airline yet to use. Lufthansa's modest incentives are similar to a reward of about $2 that American Airlines is offering agents who book directly with it. They're less lucrative than the incentives that the travel tech middlemen offer agencies. Pulling Content Out A key part of the value proposition of travel e-commerce platforms is that they agg