Germany-based corporate clients by April 1 must make a final decision about
whether to sign the airline's controversial new corporate contracts. According
to VDR, the German travel managers' association, Lufthansa has presented
clients with a stark choice: "No signature, no corporate rates," said
VDR chief executive Hans-Ingo Biehl. "The alternative is published fares."
German travel manager said he attended a meeting with other buyers in Berlin
and found that "we are all having difficulties with Lufthansa." His
company is contemplating changing parts of the contract with which it is
unhappy and seeing if the airline will accept the amendments. "If not, we
won't sign," he said, requesting anonymity.
A senior travel management source told BTN that Lufthansa annually sets a
formal deadline of March 31 for the signature of corporate contracts for the
current year ahead. "This has, however, never so far prevented
negotiations from going well past this deadline if there was a need for it,"
said the source. "It has also always been Lufthansa's official position
that no corporate fares or discounts will be filed in the systems until the
corresponding contract is signed. In practice, the fares got filed and were
made available even if the corresponding contract was not yet signed. What is
different this year is that Lufthansa has explicitly communicated to those
clients which have not yet signed that it really will not file the fares."
has shown little sign of backing down on the three contentious aspects of the
new contracts: clawbacks, authorization of marketing information data tapes and
release of payment card data. Regarding clawbacks, corporate customers
receiving upfront discounts would be obliged to write checks to Lufthansa that would
be cashed if the client fails to meet its agreed volume or marketshare
commitments. Several travel managers last year told BTN they understand why the airline wishes to take back discounts from
clients that underperform, but they considered the clauses unreasonable because
Lufthansa's revenue management system often prevents them from booking seats at
the negotiated discount on a flight even when there is availability. Without
last-seat availability, the clients argued, they cannot be expected to meet
BTN also reported that some travel
managers are unhappy about the airline insisting clients authorize the
inclusion of potentially sensitive transaction data on MIDT tapes, which
Lufthansa buys from global distribution systems. It since has emerged that
Lufthansa wants to obtain data through another means by obligating clients to release
their card spending data. Although identification of individual cardholders
would be masked, VDR told BTN the
card data would include full spend information broken down by route, airline,
booking class, price and date of issue.
concerns about the legality of compelling clients to release card data and has
urged members to seek legal advice. "We have informed our members that
they should look deep into the contracts and take some guidance from their
legal departments before they decide whether they want to sign," said
whether he expects many clients to refuse to sign the new contracts, Biehl
said: "I don't know the numbers because these are bilateral agreements,
but the feeling I have from talking to a lot of corporates is that they are
very concerned about this issue."
refused to answer questions submitted by BTN
but indicated it would make an official statement on the subject "early
believes the new contracts raise unanswered questions about who owns and
controls booking data. It has therefore written to card companies, global
distribution systems and travel management companies in an attempt to create
more transparency on the subject. "We want to know what the data process
looks like," said Biehl. "We expect to hear back in the next 14 days,
but it won't necessarily help the issue between Lufthansa and corporates."