New Lufthansa Commission Plan Pushes E-Tickets In Germany

<I>Stuttgart </I>- Lufthansa is practically mandating electronic ticketing for all of its German corporate accounts.

The airline this month announced a surprise shakeup in its corporate rebating program for 1997 aimed at cutting distribution costs by steering travelers to use domestic electronic ticketing. It plans next year to launch a "pay as you fly" pilot project designed to eliminate unused tickets as an electronic ticketing impediment.

The airline also is offering firms a "corporate label" on its direct-booking service, Internet InfoFlyway, as it presses ahead with electronic business travel management services.

German clients were shocked to learn that Lufthansa will only pay rebates on domestic Germany routes, which make up a large chunk of their air travel, if companies switch to the new electronic ticketing system, Etix. Firms also are upset at late notification of the changes, which leaves them little time to address the impact on their companies and to adapt travel agent agreements.

Lufthansa key accounts manager Lars Zanders outlined the 1997 rebate program in a presentation of the airline's corporate travel strategy at a joint meeting of the German, Swiss and Austrian business travel associations in Stuttgart from Nov. 7 through 9.

Lufthansa is reducing its sliding scale of basic rebates on international first- and business-class sales by several percentage points, Zanders said. Companies with a Lufthansa turnover of Dm5 million ($3.3 million), for example, will earn a 4.8 percent rebate next year instead of 8 percent this year. A Dm10 million ($6.6 million) turnover will be rewarded with 6.8 percent instead of 10 percent, and the maximum percentage of 14 percent for Dm20 million ($13 million) or more falls to 12 percent.

But bonus rebates for selected Asian and European destinations will rise next year, and United States and Canada will be pegged at 5 percent.

On Germany routes, Lufthansa is dropping the business-class rebate, which ranged up to 4 percent, in favor of a 1-to-2 percent rebate on business and economy valid only on Etix reservations.

Lufthansa also is extending its corporate rebates to some of its global partners for the first time in 1997. Rebates will apply to revenue flown on code-share services with United Airlines, SAS and South African Airlines, regardless of the airline operating the flight, and on code shares with Air Canada and Varig. Selected routes of Lauda Air, Condor, franchise partner Augsburg Airways, LOT and other regional airlines also will count for rebate purposes.

Zanders declined to say how much Lufthansa spends each year on its corporate rebates program. "I cannot say if we will save money through this," he said. "It depends on how business goes in 1997."

Under the Lufthansa Etix program, all business travelers with either a corporate card or private credit card can fly ticketless on all Germany routes as well as to London and Paris, beginning this month. A company or travel agent books a ticket, inputting the number of the credit card or Miles & More frequent flyer card-which will be used for identification at the airport-and can print out a travel itinerary. Upon checking in and showing the appropriate card, the traveler receives a boarding card from the counter staff or checkin machine and an optional passenger receipt showing date of travel, fare, other fees and VAT. Zanders said that with Etix, firms can manage ticketing centrally and will save on ticket logistics.

Additionally, in a pilot program taking electronic ticketing a step closer to net fares, Lufthansa will launch a "pay as you fly" test with selected firms in early 1997. Clients can book through their in-house department or travel agency, but Lufthansa will be responsible for ticketing. Clients pay at the counter or checkin machine by credit card and gain a boarding pass and passenger receipt. Zanders said the advantage is that firms no longer have to pay for flights that they book but do not use, improving cash flow and reducing work for the travel agency and company travel department. "There would be no more special tariffs, minimums or rebooking fees," Zanders said.

The system is aimed at large companies with heavy point-to-point passenger traffic, he said. It amounts to net fares for large clients, but Lufthansa does not want to introduce net fares for the general market yet, Zanders said. "We want to be careful in our relationship with travel agencies," he said. "Firms are not yet in a situation to operate net fares with management fees."

The fourth element of Lufthansa's strategy is the InfoFlyway Internet service, which is now available to firms as a tailor-made "Corporate Flyway." This gives firms airline seat, hotel room and hire car availability information and a direct booking function with credit card payment options. Companies can use it to develop an in-house travel intranet integrating their travel policies and allowing global travel management.

German travel managers reacted to the Lufthansa strategy with a mix of praise and criticism at the Stuttgart meeting. Michael Kirnberger, president of Germany buying group VDR, said the concept is technologically forward-looking, but firms could be hurt by the restructured rebates.

Wolfgang Winkler, travel manager of TV station Sat 1, welcomed Lufthansa's investment in technology but criticized the airline for introducing both Etix and the 1997 rebates on such short notice. Etix could be hit by technical problems with checkin machines that emerge during a one-year test, and there could be large numbers of confused business travelers at airports, he warned.