Lufthansa Considering Corporate Contract Revisions For 2012 - Business Travel News

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Lufthansa Considering Corporate Contract Revisions For 2012

October 14, 2011 - 09:55 AM ET

By Amon Cohen

Lufthansa likely will make changes to its highly contentious corporate contracts for 2012, BTN has learned. "Modifications are being looked at," according to a well-placed source.

German travel managers' association VDR, which recently published an airline agreement template for its members, confirmed that it too is expecting revisions to the contracts. "There are some signals that Lufthansa has listened to the market, that it needs to do something different," said VDR executive director Hans-Ingo Biehl. "We hope to see a new contract for 2012, especially in terms of the handling of client data."

Lufthansa's agreements for German corporate customers have been extremely controversial for two main reasons: the insertion of penalty clauses that lead to fines for customers if they fail to meet spend targets, and a requirement that clients must forward all their corporate card data to Lufthansa's card-issuing subsidiary AirPlus International. Some clients, including major multinational corporations, have refused to sign deals with the airline, and Germany's cartel office, the Bundeskartellamt, has launched a probe into whether the contracts illegally enable Lufthansa to gain access to confidential competitive information.

Lufthansa Group has denied the accusation, saying the information is kept from its passenger airline through a series of "Chinese walls." It is expected that clauses related to card data will be among those revised in the 2012 contracts, following talks with the Bundeskartellamt. Lufthansa would not comment. "At this point in time we cannot confirm the specifics of contracts for 2012 because there has not been any official notification to customers," a spokeswoman said.

VDR's Contract Template 

VDR has weighed into the airline contracting debate by publishing in late August its own model airline contract. At the request of members, the template is available in English as well as German, in part so that it can be used with airlines based in other countries. Biehl said VDR is in negotiations to make the template available to members of the Global Business Travel Association, a partner organization.

A VDR taskforce spent 10 months designing the model contract in consultation with specialist lawyers. "Most of the time, airlines are using their templates for corporate contracts," said Biehl. "Only the big corporations use their own procurement contracts. If you are using one provided by the airline, then the legal departments within corporate clients don't usually have enough expertise in airline language, so it often ends up going backwards and forwards. Our template provides some definitions of what a tariff is, because if you ask three airlines to define a fare, they give you four different definitions."

Biehl added that the model agreement is designed to avoid some of the pitfalls clients have faced. Some corporate customers signed the Lufthansa contracts without proper scrutiny and discovered belatedly that they had committed themselves to surrendering card data.

Whether airlines will agree to sign contracts based on the VDR template remains to be seen. "We have consulted airlines on our template as well, but not so many and not necessarily Lufthansa," said Biehl. "They see the sense of it but they have stated there are some areas in the contract they don't want. We regard this as a basis for a good negotiation. We want to see a fair partnership between airlines and corporates."

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