Lufthansa’s GDS ticketing fee draws criticism from Amadeus

Lufthansa’s GDS ticketing fee draws criticism from Amadeus

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Lufthansa Group airlines are to impose a €16 ‘distribution cost charge’ for every ticket issued by booking channels that use a global distribution system.

The new charge from September 1 will not be added to tickets purchased using in-house booking channels such as the airlines’ websites or when booked direct or bought at airports.

Travel agents will be able to book tickets without the charge by using a dedicated online portal at www.LHGroup-agent.com.

Business travellers will be able to book their individually negotiated contract rates excluding the charge at a new online portal, www.LH.com.

The changes form the basis of a new commercial strategy as the German airline group seeks to cut GDS costs, which its says amounts to a three-digit million euro amount every year.

The plan includes a “clear cost differentiation” in the various booking channels.

“Presently, the costs for using global distribution systems are several times higher than for other booking methods, such as our own online portal www.LH.com,” Lufthansa said.

But Amadeus attacked the changes, saying the new charge will penalise travellers based on the shopping channel they use.

Lufthansa Group airlines, which include Austrian Airlines, Brussels Airlines and Swiss are in the process of developing a new booking method which will enable sales partners to connect to their IT systems directly, based on the new Iata NDC data standard.

The first NDC pilot project is currently being tested at Swiss and should begin at Lufthansa during the course of the year.

Jens Bischof, chief commercial officer, said: “Until now, the percentage of revenue generated from the sale of flight tickets by our airlines has continuously decreased.

“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.”

He added: “At present, airlines are not yet able to market their services via all sales channels, as it is common in other industries.

“The contracts and structures have previously prevented any deregulation in many areas.

“We want to change this with our new commercial strategy and take advantage of greater degrees of freedom in our sales activities, providing our customers with the exact tailor-made services that they are looking for and wherever they are looking for them.”

A previously announced group-wide new economy class fare concept on European flights from this summer will enable passengers to select their desired services.

Based on the principle “you only pay for the services you want”, the three branded fares – Light, Classic and Flex – will offer a variety of customised options and ancillary add-ons.

Amadeus said: “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 [Lufthansa Group] 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.”

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