All you need to know: LH Distribution Cost Charge

Next week marks the bold move by Lufthansa Group to charge a Distribution Cost Charge for every booking on an LHG airline – Lufthansa, Austrian, Brussels and Swiss Airlines – processed by a GDS.

The airline is directing travel agents to use its Lufthansa Group See here for full details LH_VK-1860 FAQ_Lufthansa Group agent com_EN 09Jun15_v3 proofread.

While the charge will not be implementable in certain markets due to local legislation, it is being rolled out in South Africa from September 1. Meanwhile, ASATA is seeking legal opinion on the legality of such a charge in our South African market.

The move has raised the ire of several travel agent associations including the World Travel Agents Association Alliance (WTAAA) of which ASATA is an active member, as well as travel agent groupings. This week saw a leading group of corporate travel agents begin a policy of non-cooperation with Lufthansa. Advantage Focus Partnership corporate director Ken McLeod declared: “This fee is unacceptable in its current form. Make no mistake, the distribution network in its current form will be irreparably damaged by differential pricing on this scale by a major airline.

The Business Travel Coalition and a broad group of travel managers and travel management company executives from around the world are also sending  a letter to Lufthansa Group, the U.S. Department of Justice, the European Union’s Competition Commission and Germany’s Bundeskartellamt, which you can read here.

So, what do you need to know:

DCC amount: The DCC, currently set at €16 in the Eurozone, will be converted into the rand price at the time of ticket issuance.

Fare transparency: Requests in GDSs for fare quotes that include all taxes and fees will automatically include the DCC. A display in any corporate booking tool whose ticketing is enabled by a GDS also will include the fee.

Implementation: Lufthansa will implement the fee using a YR-IATA tax code until the OB field is implemented across all technology providers. When the OB field is implemented, the total fare will still be displayed.

Code-shares: The DCC will not be applied when a Lufthansa-operated flight is sold and ticketed as a code-share, but agents must be aware that they cannot book a code-share for every transatlantic Lufthansa flight. At least one leg of a code-share itinerary must be operated by the plating carrier. In addition, certain services offered by an operating carrier, such as premium economy, pet carriage and special meals, may not be appear in the display of the marketing carrier.

Refunds and exchanges: The DCC is non-refundable even if the fare is refundable. If the agent is using an automated refund tool, manual intervention may be required to prevent the refunding of the fee. The fee will not be reassessed if the ticket is changed, regardless of the nature of the new itinerary.