Lufthansa says it’s not negotiating, it intends to ‘break up’ GDS distribution

Lufthansa says it’s not negotiating, it intends to ‘break up’ GDS distribution

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Lufthansa intends to “break up” GDS distribution and won’t retreat on plans to impose a €16 fee on GDS bookings.

That was the message from Lufthansa vice-president for sales and services in Europe, Heike Birlenbach, on Monday.

She told the Advantage Focus Champions conference in Frankfurt: “This is not a negotiating tactic. Sometimes disruptive change is necessary.

“There are many airlines and thousands of points of sale, but only three GDSs. The GDSs basically control everything. We would like to break that up.”

Lufthansa announced in early June that it will add a €16 Distribution Connection Charge (DCC) to GDS bookings of Lufthansa, Swiss, Austrian Airlines and Brussels Airlines flights from September 1.

Birlenbach said: “It does not mean we are going to take over agency tasks, but we would like to challenge the GDSs. We’ve been in talks with the GDSs a long time [and] we don’t see enough technological developments. If we don’t move now, others could move in.

“We don’t get enough value for money. We calculated the difference between direct and GDS distribution and €16 is the average.” She added: “If the difference changes because pricing changes, the DCC could change – €16 is not a fixed amount forever. But that is the amount now.”

Agents and travel management companies (TMCs) can only avoid the charge by booking direct. But Lufthansa does not expect most agents to use its new agency website.

Birlenbach said: “We don’t believe TMCs will go through the site. We know it won’t duplicate everything the GDSs provide. We recognise it will cause additional workload.”

She acknowledged: “Some [companies] have said they will boycott [Lufthansa]. We know the risk involved. [But] it’s not a gamble. The DCC gives us leeway to enforce changes. We believe this is the way forward. We want to be in the driving seat. We know other airlines will not follow right away – they are linked into [GDS] agreements. But we believe other airlines would follow if they could.”

Birlenbach told Advantage members: “You need to rethink your business model in terms of the [financial] returns from the GDS.”

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