As part of a settlement with a group of U.S. travel agencies, Lufthansa German Airlines on Jan. 1, 2004, will offer a performance-based incentive program, replacing base commissions, and also will open to all U.S. travel agencies access to fares currently available only on its Web site.
The decision stems from a lawsuit filed by a group of travel agencies angered by Lufthansa's actions to reduce base commissions. "This program gives the smaller travel agencies a chance to show they can make a difference, and we expect Lufthansa's sales will get a huge boost," said Sarah Futch Hall of Travel Specialists in Wilmington, N.C., the lead plaintiff in the case.
Specifically, the Lufthansa Transatlantic Bonus Program, which eyes stronger ties with small and midsize agencies that do not have pre-existing contractual Lufthansa relationships, next year will provide participating agencies as much as a $100 bonus on each roundtrip transatlantic booking. Participation in future years will be based on each agency's ability to reach certain revenue goals.
Performance-based incentives for travel agencies came to the forefront last March when Delta Air Lines led the industry in abolishing base commissions. America West Airlines, however, is thus far the only major U.S. carrier to announce a formalized agency compensation program
(BTN, March 22, 2002).
Meanwhile, also on Jan. 1, 2004, Lufthansa plans to make available to all U.S. travel agencies fares on its Web site. U.S. carriers currently are grappling with Web fare strategies. Some, including Continental, United and US Airways, have struck deals with global distribution companies to list Web fares through the traditional GDS channel. American Airlines, however, is pushing its EveryFare program, which trades to agencies access to Web fares in exchange for passing on portions of its GDS costs.