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International on Wednesday announced the launch of a debit-based centrally billed
account that will not be subject to a new credit card booking fee also announced
Wednesday by its parent, Lufthansa Group.
new airline fees will be applied from Sept. 5 in Finland, the Netherlands and the
United Kingdom—markets where the home carrier already imposes a card fee—and from
Nov. 2 in Belgium, Germany and Switzerland, the same day on which AirPlus will debut
its Debit Account. The fees will apply across all sales channels.
apparently preferential treatment for a product issued by its own payment subsidiary
already has attracted criticism, but AirPlus United Kingdom managing director Yael
Klein said her company soon will announce that other airlines are waiving card fees
for users of the new AirPlus debit product. Klein said AirPlus discussed the debit
account concept with other airlines long before addressing the subject with its
AirPlus Debit Account currently is the only lodge product that will be exempt from
Lufthansa's new "Optional Payments Charge," but only on bookings with
the main Lufthansa airline and Swiss. The OPC also will be applied on tickets booked
with Lufthansa Group's Austrian Airlines, British Midland International and Brussels
Based in Hueckelhoven-Ratheim,
Germany, CTC Corporate Travel Consulting proprietor Jörg Martin condemned the simultaneous
announcements of the debit account and the Lufthansa surcharge. "Lufthansa
seems to be protecting the business
of its own credit card daughter company," he said. "In recent years, it
has been obligatory in Germany to use a credit card payment solution to get a Lufthansa
corporate contract. To ask for an additional fee for a supplier-mandated process
and offering an in-house payment solution as the only free-of-charge alternative
is very bizarre."
commodity director mobility and facility Jo-Achim Hamburger also offered scathing commentary. "This is not a fair
market opportunity for other card providers," he said. "I don't know if
the European Commission will like Lufthansa wanting to support and protect its own
product, but it must have made a lot of legal checks to cover itself."
accusations of favoritism. "We have been working on the debit account since
2009," she said. "We have been very open about the need to find a model
[to deal with airline credit card charges]. We have been talking to many airlines,
in some cases long before we spoke to our own mother company, and we are hoping
to announce some other airlines [offering fee waivers] within the next few days
or weeks. It was a logical step for Lufthansa to approach us about a debit account
because we are the only card company that has been talking about it."
When asked if Lufthansa is giving
preferential treatment to its own subsidiary, a spokeswoman for the airline group
replied: "In general, the Optional Payment Charge applies to debit cards as well,
because these are entered into global distribution systems in the credit card format.
An automated differentiation of debit and credit cards in GDSs is not possible.
Significant costs are also incurred for using the most popular debit cards. As a
result, there is no general justification for exempting these cards. Exemptions
are possible depending on the cost structures of individual debit cards."
is not the first time in recent months the relationship between Lufthansa and AirPlus
has caused controversy. Germany's federal cartel office in April launched an official investigation into whether Lufthansa's corporate contracts illegally enable the
airline to gain access to confidential competitive information. The contracts oblige
clients to authorize their card issuers to forward data to AirPlus. However, both
Lufthansa and AirPlus, which claims a 66 percent share of the German corporate payment market, insisted to
BTN that confidential data is kept from
the airline through a series of "Chinese walls."
Weighing Debit Versus Credit
new AirPlus Debit Account offers broadly the same features as the standard Company
Account lodge product. As is the case with the Company Account, clients using the
Debit Account can append several fields of corporate data, such as cost centers
or employee identification numbers. The main difference is that transactions through
the Debit Account are debited immediately whereas clients usually have two weeks
to settle their Company Accounts.
therefore will have to weigh the advantages of avoiding the OPC with losing their
credit facility. Klein said AirPlus will provide a savings calculator to help clients
make that assessment. Clients also should consider the loss of credit card issuer
rebates and process duplication if they switch to the debit account for Lufthansa
and Swiss tickets but not for other airlines. "The implementation will cause
considerable additional work and cost," according to a statement from German
travel managers' association VDR.
don’t envisage everyone changing, but before this there was not an option,"
Klein said. "You could stay with credit or move to invoicing. We have to embrace
change, work with it and move forward."
Stoeckel, BCD Travel senior vice president
for supplier relations in Europe, the Middle East and Africa, told BTN that a client's decision on whether to
switch to the AirPlus Debit Account or to invoicing (for which many German TMCs,
including BCD, charge a fee) will depend on their destination mix.
German Travel Managers 'Astonished'
Lufthansa's Optional Payments
Charge will follow similar
card surcharges already applied by British Airways, KLM and many budget airlines. In a slide presentation
sent to agents on Wednesday, Lufthansa noted that corporate fares for German and
Swiss clients until March 31, 2012, will be exempt from the OPC. It added that no
contractual amendments will be be necessary and there will be no impact on net flown
BCD's Stoeckel told
BTN that Lufthansa Pay As You Fly customers
also will not be affected until March 31, and added that there are indications larger
clients may end up avoiding the OPC altogether. Because March 31 is the date current
Lufthansa corporate contracts expire, "the OPC could then become a subject
for negotiation," he said. "The target group for this fee is very much
the small and medium enterprise client."
Lufthansa move drew swift criticism from German travel managers, The Beat reported.
"German companies are spending more than 11 billion euros per year for business
flights," according to VDR president Dirk Gerdom. "The new payment charge
increases costs up to 2.5 percent, although the merchant fee Lufthansa is paying
to the credit card companies is most probably less. We are more than astonished
about this step by Lufthansa. Only in November 2010, at the VDR fall conference,
Lufthansa gave assurances that a credit card surcharge would be out of the question."
Hamburger said, "What we see here goes back to the 1960s, when the client was
forced to pay by cash or invoice. We are in a uproar."
to a Lufthansa spokeswoman, "The fees will only partially cover the credit
card costs. Last year, Lufthansa had to pay credit card fees of a three-digit-million
euro amount. Therefore costs will be shared between the airline and the traveler."
fee will be €7.50 in Finland and the Netherlands,
and £4.50 in the United Kingdom, the same
as charged by the home carriers. In Germany, the fee will be €5 (including value-added tax) for German domestic
journeys, €8 for flights to the rest of Europe and
€18 for long-haul flights. In Switzerland,
the fee will be 6 Swiss francs for domestic flights, 11 Swiss francs for other intra-Europe
flights and 22 Swiss francs for long-haul flights, and in Belgium there will be
a flat fee of €7.50.