Lufthansa To Halt Fuel, Security Refunds For Unused Nonrefundables

Lufthansa confirmed to EuroBTN yesterday that as of March 1 it no longer refunds fuel and security surcharges on unused nonrefundable tickets. Although the new rule applies worldwide, it only has been announced in German-speaking countries. The German travel managers association VDR has condemned the rule change, while travel management companies said it would increase their operational costs.

Lufthansa said that taxes and fees that the airline charges over and above the ticket price and passes on to third parties, such as airports and air traffic control, will still be refunded on request. It currently imposes a fuel surcharge of €24 per flight on short-haul routes and €77 to €92 on long-haul routes. In addition, it levies a surcharge of €8 per flight to offset its security costs.

VDR criticized the decision on the grounds of inconsistency. It said Lufthansa is effectively treating surcharges in the same way as the base airfare, yet at the same time the airline refuses to include the surcharges in corporate negotiations. "The problem is the definition of the surcharges," said VDR president Dirk Gerdom. "Airlines are defining them in an arbitrary manner at the expense of their corporate clients and passengers."

Thomas Stöckel, EMEA senior vice president for supplier relations with BCD Travel, agreed, adding, "Passengers can argue they have not used the airline's fuel, so they should not have to pay for it if they do not fly.'

A statement from Lufthansa said, "When a customer books a nonrefundable ticket, they are thereby accepting the applicable terms and conditions, and benefit as a rule from a lower price for their flight. If they cancel their flight, only the taxes and charges are refunded, since these components in the ticket price are passed on by Lufthansa to third parties, and are not incurred if a ticket remains unused."

The airline added that its rule change brings it in line with the practice of many of its competitors and will help to differentiate nonrefundable fares further from more expensive, less restricted tickets. HRG director of distribution services Tony Berry said many airlines have quietly changed their rules on fuel surcharge refunds over the past two years because of the automation of refund claims for electronic tickets. "With e-ticketing, as soon as a passenger doesn't fly, an automated process starts to refund their ticket," he said. "The number of refunds has therefore increased dramatically."

BCD's Stöckel said the decision not to refund surcharges creates additional processes for TMCs because the surcharges are displayed in the ticket box allocated for taxes. "The genuine taxes can be refunded, so now we will have to separate them from the surcharges," he said. "We will have to calculate manually what we can and cannot refund to the customer."

Last week, the Lufthansa group—which also includes Swiss, Austrian Airlines, British carrier Bmi and Germanwings—announced an operating profit of €130 million for 2009, down €1.2 billion on 2008. Revenue fell 10.3 percent to €22.3 billion. Chairman and CEO Wolfgang Mayrhuber described the results as "a remarkable performance."