German Cos. Demand Lufthansa Give Them Air Miles
<I>Frankfurt</I> - Leading German companies are threatening to switch business away from Lufthansa unless it awards loyalty points to them rather than individual travelers.
More than 20 firms--including Metallgesellschaft, Siemens and Commerzbank--met recently to hear the conclusions of a legal report on the flag carrier's Miles & More program and to agree on a common position. The report, commissioned by Metallgesellschaft, suggested that the program, which has 2.1 million members, violates several elements of German competition law because it encourages the purchase of more-expensive flights.
Travel managers warned that they will switch bookings away from Lufthansa toward cheaper carriers, such as British Airways and Air France, unless the airline reforms Miles & More.
They demanded that companies be allowed to join the program so that miles can be pooled centrally and cashed in. They also demanded an end to the program's 14-day advance booking deadline for free flights, which they say is unrealistic in the corporate travel world, and a less restrictive policy on seat availability.
Only a few airlines, including Japan Airlines, Asiana, Korean Air and Virgin Atlantic, offer miles to both the company and the traveler, and one European carrier, Maersk Air, offers them only to the corporation (see story below).
Industry sources estimate free Lufthansa flights earned on Miles & More to be worth more than $60 million a year.
"We believe that bonus miles earned on business trips should be used for business trips," said a spokesman for electronics giant Siemens, which spends $300 million a year on Lufthansa.
"We are fundamentally against Miles & More," said Danuta Weicht, travel manager of Commerzbank. "It is a client-binding program. We want to reach a situation where the miles are available to the firms."
Commerzbank, one of Germany's largest banks, spends $5 million a year on Lufthansa flights and requires all employees to disclose their mileage accounts. Under an agreement reached with Lufthansa in 1993, the company can exchange those miles for business flights. But a traveler's mileage can be used only for flights by the same traveler, which diminishes their corporate value. "I would have more flexibility if I could use the miles for other employees," Weicht said.
Michael Kirnberger, chairman of the VDR German business travel buying consortium, said it is "understandable" that companies would want to own travelers' miles, but added, "the threat to refuse to use Lufthansa is not realistic." He noted that although many firms require employees to disclose how many miles they earn on business trips, it is difficult to enforce.
A Lufthansa spokeswoman said the airline does not plan to change its system, and added that large clients already benefit from rebates on sales volume.