Lufthansa's 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."
One 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 BTNthat 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."
Lufthansa 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 BTNthey understand why the airline wishes to take back discounts from clients that underperform, but they considered the clauses unreasonablebecause 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 their targets.
BTNalso 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 BTNthe card data would include full spend information broken down by route, airline, booking class, price and date of issue.
VDR has 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 Biehl.
Asked 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."
Lufthansa refused to answer questions submitted by BTNbut indicated it would make an official statement on the subject "early next week."
VDR 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."
The article originally was published in Business Travel News