Around 95 percent of Lufthansa’s
corporate clients in Germany have signed the controversial contracts introduced by the airline earlier this year, the head of one of the country’s largest
travel management companies told BTN
on Tuesday.
In many cases, negotiations
between airline and client have led to compromises over Lufthansa’s contentious
penalty clauses for not meeting volume or marketshare commitments, although in
all cases some element of a penalty has been retained, the executive said. The
source added that Lufthansa has lost marketshare this year, attributing the
fall in part to corporate unhappiness with the new contracts.
The TMC leader told BTN that buyers had found Lufthansa
prepared to compromise on some issues, but not on others. “To my knowledge,
there is a remnant of the penalty clause in all contracts but Lufthansa did
back down a little bit,” he said. “There has not been a standard compromise.
Instead, the compromise has ranged from the amount of time before a penalty is
imposed to not taking back discounts that were given upfront but reducing
kickbacks instead.”
BTN reported earlier
this summer that buyers had particularly objected to paying penalties for
non-fulfillment of commitments because Lufthansa was not giving them last-seat
availability at the negotiated rate in return, making it impossible to use the
corporate deal on some flights. “Addressing the lack of access to inventory is
something Lufthansa has not compromised on because it is fundamental to the
airline’s yield management,” the TMC executive said Tuesday. “This is the main
issue for the corporate clients that have still not signed.” According to the
source, the majority of those who refused to sign are Germany’s largest
corporations.
German travel buyers also had objected
to a clause compelling clients to authorize the release of their data by
Lufthansa to global distribution systems to create marketing information data
tapes. However, the TMC source attached less significance to this point. “In
reality, this is not a new issue,” the source said. “It was confirming a
practice which was there before. Lufthansa put it in because of the European
Commission CRS Code of Conduct. Buyers made a stand on the issue because of
their emotional resentment of Lufthansa.”
The source went on to claim that
although the German flag carrier has recovered in volume this year, its pace of
recovery has lagged behind other airlines in the German corporate market and
therefore its marketshare has slipped. “The willingness to pay more to fly Lufthansa
reduced in the recession and now that the economy is improving, passengers are
not switching back to it as much as everyone thought they would,” the source
said.
At a BTN Top 100 European Buyers session at Tuesday’s NBTA Europe
conference in Lisbon, travel managers also expressed unhappiness with the
Lufthansa contracts. “Lufthansa is one of the worst in terms of what it is
asking for in its contracting,” said one manager with Europe-wide travel buying
responsibilities. “If you don’t provide MIDT or meet its other demands, it is
willing to walk away.”
Another said: “I think all the
airlines will be watching to see what happens with Lufthansa, which has taken
contracting to an extreme.”