ITB 2016: Lufthansa stands firm over Distribution Cost Charge

ITB 2016: Lufthansa stands firm over Distribution Cost Charge

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Lufthansa has declared itself “highly satisfied” with its distribution six months into charging a €16 fee for bookings via global distribution systems (GDSs) and insisted there will be no change in strategy.

Jens Bischof, Lufthansa executive vice-president for sales and chief commercial officer, said the carrier is in “advanced talks with all key partners” to establish direct distribution.

He dismissed claims that Lufthansa has lost market share since imposing the €16 (£11.20) Distribution Cost Charge (DCC) on GDS bookings last September, and hailed “the economic development of the Lufthansa Group” as “due to our new distribution strategy”.

Speaking at German trade show ITB in Berlin, Bischof said: “We have achieved more substantial progress with our B2B direct connections in the last six months than in the past five years.”

The carrier aims to distribute through new technology providers as well as develop direct connections to corporate clients, travel management companies (TMCs) and tour operators.

Yesterday, Lufthansa provided a list of “distribution partners already using direct booking interfaces (Direct Connect)” to the group’s airlines.

These include UK-based TMC Hogg Robinson Group (HRG) as well as AERTiCKET, FTI-Ticketshop, tour operator L’TUR and dynamic packager Vtours in Germany.

The carrier said leisure giant Tui “has also confirmed plans for the alternative distribution channel” while Thomas Cook is in “a constructive exchange regarding the possibility of direct connection”.

Bischof said: “The good economic development of the Lufthansa Group is due to our new distribution strategy and attractive price concepts.

“We are building alternative distribution channels. We are working with Hogg Robinson. Tui is preparing its own direct connect and with Thomas Cook there is also a direct exchange.

“Corporate customers are also working on direct connect. There is close cooperation to connect to our system [and] 14 technology providers can provide the interfaces.”

Reminded that the Guild of Travel Management Companies (GTMC) in the UK has suggested Lufthansa’s market share between Britain and Germany has fallen from one third to one quarter, Bischof said: “I’m not sure where the figures come from.

“We do not see an overall deterioration in booking numbers. We do not see any deterioration in seat loads.

“We had the new distribution strategy for six months and have not observed a change, no signs at all. Our load factors are at a record level.”Bischof insisted: “We are highly satisfied. We have no losses whatsoever. The situation is very good.

“We are still building up these booking channels. Numbers increase exponentially with new partners and new providers coming in.

“We are not providing any numbers, but the take up is enormous.”

Asked why there were no TMCs other than Hogg Robinson Group on the list of partners using direct booking interfaces, Bischof said: “We are in advanced talks with all key partners.

“News will follow in due time. We are working on further developments, on continuing expansion of this spectrum.”

He added: “Of course we are in contact with the three GDS providers. The talks are constructive, but we don’t know how this will develop. I hope we can announce something soon.”

Bischof insisted Lufthansa had to move from “depiction of our products in terms of prices, times and stops, and it is not possible to do this without a change of distribution strategy”.

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