Business travelers try to reason with Lufthansa about new fees, booking strategy
You can’t blame Lufthansa for seeking new ways to pad profits, but its latest move to add a "distribution cost charge" of €16 to every booking made through a “global distribution system” (i.e. third-party travel agents) is pissing off fliers and booking sites about as much as you'd expect.
Business travelers are trying to come to the rescue by striking a deal, but more on that later.
Agencies are calling the fee “a bad choice,” and possibly illegal, saying it could seriously impact the operation of online travel agents using GDSs like Travelport, Amadeus or Sabre and cut into the profit. Opting out GDSs, and thereby avoiding the tax, however, not only seems worse, but threatens agencies' most stable source of income.
For Lufthansa, imposing the fee makes booking tickets through its own website cheaper than through agencies, and allows for new bundling packages not available on the GDS. Plus, it cuts down on comparison shopping by fliers, who only see Lufthansa's prices. As Jens Bischof, Lufthansa’s chief commercial officer, explained to Travel Weekly:
“We have two strategic targets: to be able to display the content, the price and the product in the channel we think is the most promising for selling our product and services, and to more evenly distribute the cost of services in the travel chain.”
The biggest threat to travel agencies is if the move is successful enough that other airlines will follow suit, and indeed Air France-KLM said in early June it was considering a similar charge.
In yet another effort to head off the tax at the pass, more than 100 business travel agencies and corporate buyers have invited Lufthansa to talks mediated by the Business Travel Coalition. There, they plan to lay out their concerns about the new fee and hammer out a solution.
Based the frank language in the letter sent Lufthansa chairman and CEO, Carsten Spohr, a testy meeting may be expected.
“LHG [Lufthansa Group] is either profoundly unaware of the needs and complexities of serving the needs of the business traveler, or it has chosen to disregard those requirements altogether. You are forcing a choice between highly inefficient processes for managed-travel programs, or paying significantly higher fares.”
Thus far, Lufthansa hasn't responded or appeared open to the meeting, only stating:
"The introduction of the DCC (Distribution Cost Charge) is fully compliant with all legal requirements and had of course been checked carefully in advance of the announcement.”
The new charges begin in September.