The Business Travel Coalition is rallying travel management professionals against Lufthansa's Preferred Fares program, which imposes what amounts to a €4.90 per-way surcharge, in addition to a value-added tax, on fares booked through the Amadeus global distribution system in a handful of European countries.
As detailed by a letter sent today to Lufthansa chairman and CEO Wolfgang Mayrhuber, 147 signatories, including multinational travel buyers, travel management company executives and other industry professionals, shared the sentiment that Lufthansa is abusing "its dominant market position" by adding costs and inefficiencies to the travel management model. The letter argues that corporations would have to book Lufthansa tickets in those countries through the carrier's Web site—a burden on the managed travel process—or ante up a fee to book through preferred channels.
Lufthansa in January announced plans to impose the per-way surcharge plus value-added tax on fares booked through GDSs in Germany and Austria on July 1, and in Switzerland and Liechtenstein on Oct. 1
(BTNonline, Jan. 22). Travelport and Sabre since came to new terms with Lufthansa and its Swiss subsidiary to shield its subscribers from the surcharge, but competitor Amadeus has yet to reach an agreement, instead absorbing the fees on their customers' behalf. Amadeus extended by one month its fee shield in Germany and Austria to Jan. 31, 2009, and in Switzerland until March 31, 2009
(BTNonline, Nov. 25). BTC chairman Kevin Mitchell said Amadeus is the dominant GDS in Germany.
Lufthansa in a statement said the fee "only applies to Amadeus bookings for Lufthansa flights originating in Germany, Austria or Switzerland," noting that "agents can still use the other GDSs such as Sabre, Galileo or Worldspan to make their bookings." Lufthansa added it "is certainly interested in achieving a solution with Amadeus."
"We remain convinced of the added value and technical efficiency of GDSs for our sales and distribution, but the commercial model of this system needs to change to find ways to make sales via GDSs more cost-effective in the future, too," said Lufthansa in the statement. "In consequence, the Preferred Fares Program also ensures our efficiency in the future and will enable Lufthansa to continue to be a stable and reliable partner for both our customers and our travel agencies."
The BTC letter asks Lufthansa to disband the system or risk some of its largest customers shifting business "to airlines that build their distribution programs around our preferences."
The letter claims Lufthansa is "shifting its entire distribution cost to the customer," a move BTC called "a hidden, indirect fare increase" equaling "tens of millions of euros" and adding other costs to the process. BTC said Lufthansa's surcharge defies the managed travel model and adds "inefficiencies" to established corporate travel practices. The endgame, BTC fears, is other carriers would adopt the Lufthansa model, expanding the problems beyond one carrier and a handful of countries.
BTC said 99 of letter's 147 signatories have operations or headquarters in Germany. The signatories, who hail from more than 100 countries, include representatives from such large multinational companies as BMW, Deutsche Bank, Honeywell, Johnson & Johnson, Merck and SAP. BTC said it plans to share its protest with governmental regulators on both sides of the Atlantic next month.