Lufthansa Denounces Airfare Unbundling

Lufthansa spoke out against the fast-accelerating trend for airline fare unbundling Tuesday, criticizing it as devaluation of a high-value product that is confusing for passengers.

Speaking at the Business Travel & Meetings Show in London, Lufthansa U.K. and Ireland general manager Marianne Sammann said, "We feel the product we provide has to have a price everyone can understand. At Lufthansa, we don't believe it is right to pretend an airfare is the same as a taxi fare. That does not make it helpful for our customers to trust us. Air travel is a high-value mobility solution and that value has a price. We need to capture the value of the product in the price we communicate."

Kyle Moore, vice president for product marketing at the travel technology company Sabre, told the same session that industrywide efforts are underway to enable easier booking and fulfillment of ancillary services, including through global distribution systems. These include building options like checked bags or aisle seats into conditions for fares loaded into the GDSs.

Airlines and GDSs also are writing standards for electronic miscellaneous documents that will allow fulfillment and record creation for ancillary services. Moore said he expects the standards to be launched by the third quarter of 2010. In addition, Moore reported, airlines and card vendors are collaborating on creating standards for culling card data from the new electronic records.

"What we hear most often from corporate customers is that they want access to content without going outside the normal processes," he said. "It's got to work within their workflow. Therefore, the emergence of standards is critically important." Moore said some airlines predict that up to 30 percent of the total price of a ticket they sell will be through ancillary fees.

Another critic on the panel of the airfare unbundling trend was Toni Goth, senior manager of travel and vendor operations for NetJets Europe. "It raises concerns for me as a travel manager because we don't want airlines to take out cost, only to put it back in at the end of the process," he said. "Airlines can package fares in any way they like but we need mechanisms and standards to get transparency. What we don't like is where airlines put up fares by creating confusion."

An additional problem for travel managers, said Jean Covelli, president of U.S.-based travel management company The Travel Team, is that corporate clients' spend with airlines through ancillary fees is not being taken into account at the negotiating table.

Covelli said booking unbundled products adds 30 percent to TMCs' labor costs if they have to source them through alternative channels to the GDS.