ASATA is disappointed with the decision announced this week by Lufthansa Group that it will be levying a €16 distribution fee on all bookings made through any Global Distribution System (GDS).
The Lufthansa Group, which includes Austrian Airlines, Brussels Airlines, Lufthansa and SWISS, announced that it would be levying a Distribution Cost Charge (DCC) per GDS-generated ticket effective September 1, 2015. The precise exchange rate, it says, will be determined at time of fare filing. See the full press release here.
Travel agents ticketing any of the four Lufthansa Group carriers through the GDS will be affected, while direct bookings through the carriers’ websites will not incur an additional fee. The €16 charge will also not be added to tickets purchased at the airlines’ service centres and airport ticket counters.
Lufthansa Group says it is in the process of developing a new booking method that will enable its “sales partners” to connect to their IT systems directly based on IATA’s NDC (New Distribution Capability) standard although no fixed timeline for this to occur has been given.
Says ASATA CEO Otto De Vries: “We are disappointed the Lufthansa Group was unable to negotiate an acceptable distribution fee with its GDS partners and that they could not find any other mechanisms to absorb their ‘distribution costs’ of €16.
This move is very disappointing because now more than ever, says Otto, because a traveller should be able to rely on neutral and impartial advice of travel agents to find their way through the jungle of airline fares, charges, fuel surcharges and other ancillaries.
“The LH strategy will be another hidden cost passed on to the consumer in the form of an added tax, fee, or surcharge which for the travel agency is considered another Non Commissionable Fee (NCF), and will require you to collect and explain to your client the additional cost that is associated to booking through a GDS. As more items continue to get thrown into this ‘tax’ line it makes fare transparency and comparison shopping more difficult. In fact, there is no comparison shopping possible when the consumer goes on the LH website.
“Passing this cost on to the agent, or forcing them to use an alternate booking platform, could possibly result in our members off-selling the product and would negatively impact on the Group’s position in this market, which relies heavily on agent support.
“ASATA has spoken directly with Dr. Andre Schultz, Lufthansa General Manager South Africa, and will continue to monitor the decision by the Lufthansa Group to keep our members informed. Any comments from industry would be appreciated.”
What the GDSs say:
“Amadeus believes that the traveller is at the heart of the travel industry. 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.
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 Lufthansa Group, 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.
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.”
“We stand ready to work with airlines globally that wish to sell and retail their products through Sabre. Lufthansa’s proposed ‘cost distribution charge’ disadvantages consumers and travel agencies. The GDS is the most preferred and efficient channel for consumers and travel agents to shop, book and manage travel, and provides consumers with transparency, choice and the ability to comparison shop. We stand behind the significant value we provide airline customers and agencies around the world, and we expect to find a mutually beneficial solution for both Lufthansa and our agency customers.”
“We believe this proposed surcharge is not in the interests of either the end-traveller or the airline group. Meanwhile, Travelport-connected agents worldwide can still book the full, published content from all of the Lufthansa Group airlines (Lufthansa, Swiss, Austrian Airlines and Brussels Airlines) with no surcharges.
We continue to remain focused on providing our travel agency customers worldwide with the broadest possible travel content and providing our airline partners with cost-efficient and highly effective global distribution. Many of our airline partners, including the Lufthansa Group, are now also taking advantage of our suite of industry-leading merchandising solutions. These solutions allow airlines to connect to us and display and retail all of their content, including their ancillary content, in a flexible way that meets their business needs.”