Lufthansa Group Plans €16 Surcharge for Third-Party Bookings
Lufthansa Group and its airlines – Lufthansa, Austrian Airlines, Brussels Airlines and Swiss International Air Lines – announced plans to increase overall profitability by moving more flight bookings onto its own channels and adding a surcharge for tickets booked using global distribution systems, or GDS.
Primary users of global distribution systems are online and traditional travel agents.
Beginning September 1, 2015, Europe’s largest airline group will include a “Distribution Cost Charge” of €16 for each ticket booked by a channel using GDS. With the change, “a greater portion of the revenue will be earned from flight operations,” the airline said. The change applies to all GDS systems worldwide.
Lufthansa concluded a completely new agreement with GDS providers Amadeus and Sabre and is in the process of negotiating a new agreement with Travelport. The airline said that it pays over €3 million per year in GDS fees. “We’re not just willing to pay the bill of others,” said the airline’s chief commercial officer, Jens Bischof, at a news conference Tuesday.
“I’m not saying that the GDS’s are not good any more – the channel needs to be cost efficient,” said Bischof. “We have alternatives so that the customer does not have to bear the GDS charge. The technology is ready and the market is ready.”
“Right now, 30% of total volume goes via online channels, with 70% of that being through indirect channels such as travel agents and travel management companies,” said Bischof. “With the alternative being added and the possibilities of direct connections, it will give us the ability to increase that.”
“The measure of success is that we have a fair and competitive distribution cost in each channel,” he added.
The carriers will also introduce more modular pricing options. For intra-European flights, passengers will be able to select different levels of services, namely “Light,” “Classic,” and “Flex,” although pricing details for the services will be released until late July.
Lufthansa corporate customers will be able to benefit from both contract pricing and the new price options without having to pay the €16 surcharge by using Lufthansa’s systems for booking tickets.
(Photo: Accura Media Group)