Amadeus, Lufthansa Bury Hatchet With Surcharge-Free Full-Content Pact

Amadeus and Lufthansa last month ended a two-year rift with the announcement of a full-content distribution deal with no surcharges. Sources indicated to EuroBTN that Amadeus was keen to resolve the damaging dispute between Germany's largest global distribution system and airline, as well as a partial owner, ahead of an initial public offering they expect Amadeus to announce in the first quarter of 2010.

The new deal, with both Lufthansa and its subsidiary Swiss, will take effect worldwide starting March 1 through the end of 2014. Lufthansa owns 11.57 percent of Amadeus.

German travel buyers and agents welcomed the announcement of a new, surcharge-free deal between their leading GDS and airline. "The agreement between Amadeus and Lufthansa/Swiss fully reflects the interests of our association members," said Dirk Gerdom, president of German travel manager association VDR. "This will mean that the additional transaction charges formerly invoiced to the customer in this connection by the TMCs will no longer apply. Consequently, the established booking and settlement procedures which are both essential and highly effective for corporate clients are once more guaranteed."

Klaus Laepple, president of the German travel association DRV, said: "We welcome this new deal. This is good for travel agents as well as for customers." His views were supported by Rose Stratford, senior vice president for global supplier relations with BCD Travel, the largest TMC in Germany. "We are pleased with them finally reaching agreement," she said. "It was important for us to ensure we have access to full content without paying a fee."

Both Lufthansa and Amadeus declined to comment on the terms of the agreement or why it has finally been resolved after two years of conflict. "It was a good deal for the two parties," said an Amadeus source. A prepared statement from Thierry Antinori, Lufthansa's board member for marketing and sales, said: "This agreement strikes an important balance between delivering distribution efficiency for Lufthansa in a cost-effective manner while at the same time maximizing our volumes."

The deal ends a period of acrimony starting in January 2008 with Lufthansa's announcement of its much-criticized Preferred Fares Program. PFP effectively meant the airline surcharged €4.90 per booking segment to travel agents who booked through GDSs that failed to agree preferential deals with Lufthansa.

Although Sabre and Travelport came to terms with Lufthansa quickly, Amadeus refused to sign, which meant that, starting in July 2008, Amadeus-using travel management companies had to pass on the surcharge to clients. This prompted protests from many corporate clients that the PFP fee was an indirect price increase: Most TMCs imposed an administrative charge on top of the €4.90 to handle the extra processing costs of settling the PFP fee through agency debit memos. Initially, Amadeus compensated its TMC customers for the PFP fee, but this ceased in Germany in February 2009.