Lufthansa and subsidiary Swiss International Air Lines last week announced plans to add fees to certain tickets booked in four countries through global distribution systems. In doing so, they join easyJetin Europe and Southwest Airlinesin the United States in programs that shift to consumers or distributors at least some costs of participating in the reservations systems on which travel agents and their business travel customers rely.
The decisions predictably drew criticism from some travel management circles.
Lufthansa and Swiss on 1 July will raise most fares in Germany and Austria by €15 (US$21.94) each way, and on 1 October will raise most fares in Switzerland and Liechtenstein by 25 Swiss francs (US$22.76) each way. Fares not subject to the price hike will be called Preferred Fares. Lufthansa and Swiss Preferred Fares will be available via "any GDS" to agencies signing "Preferred Fare agreements," for €4.90 (US$7.17) per ticket coupon and 8 Swiss francs (US$7.29) per ticket coupon, respectively, plus any applicable value-added taxes. Both carriers' Preferred Fares also will be available at no extra charge through direct channels, including the carriers' online travel agent portals. All other fare types booked in GDSs will not be subjected to the new surcharges.
"We will thus be able to give our travel agency partners access to all the Lufthansa fares in their GDS and offer them standard, high-quality fare information, as there will no longer be any distinction between online fares and stationary fares," according to a statement by Thierry Antinori, Lufthansa executive vice president of marketing and sales. "We remain convinced of the added value and technical efficiency of GDSs for our sales and distribution. But the commercial models of this system have changed, and we must find ways to make sales via GDSs more cost-effective."
According to Swiss, certain U.S. and U.K. airlines "have found that, by introducing preferred fare models, they can successfully counter the growing fragmentation of fare information in different GDSs and can also achieve sizeable cost savings."
Nevertheless, the new Lufthansa and Swiss policies discouraged some in the travel management community. "This is a simple price increase, which has also deep impact on a corporate's relationship with the appropriate travel management company," according to Dirk Gerdom, head of global travel management for SAP AG's global purchasing organization. "Lufthansa did not care about related processes for collecting the surcharges on the TMC side, as well as the necessary system development cost when launching the new model ... We now have to check how to react appropriately."
The airline decisions evidently surprised Amadeus, Europe's largest GDS. "Lufthansa seems to be charging more than the cost of distribution for GDS access to its Preferred Fares," according to an Amadeus statement. "The €4.90 fee exceeds Amadeus' average booking fee for Lufthansa flights out of Germany ... It is inconsistent for Lufthansa to pass the entire cost of this onto travel agents."
Travelport GDS, which runs both the Galileo and Worldspan systems, said it is discussing with Lufthansa and Swiss "the rationale for their fare structure changes ... Travel agents consistently tell us that they prefer to book via the GDS channel because of the efficiency and convenience it offers them and their customers. It is with this in mind that we are evaluating the new Lufthansa and Swiss fare structures."
A spokesperson for Sabre Travel Network, operator of the Sabre GDS, said the company had no comment.
Previous airline attempts in the United States and Europe to pass distribution costs to customers have drawn criticism from the travel agency community. The U.K.'s Guild of Travel Management Companies chief executive Philip Carlisle last week told The Beatthat his members are more likely to use GDSs to check easyJet's fares and availability "but then use the easyJet Web site for bookings," especially because the airline said its lowest fares would still be available exclusively through its direct Web channel.
Despite his expectation that easyJet would not budge from its new policy, Carlisle said the airline is "killing the goose laying the golden egg." EasyJet is discouraging agencies that "bring premium traffic," he explained, because its last-minute fares often are comparable to those of competitors that do not charge fees for GDS bookings.
Carlisle also noted concerns by some GTMC members that other airlines would attempt to pass GDS costs to customers. In addition to Lufthansa and Swiss, executives from KLM Royal Dutch Airlines in Europe and Northwest Airlines in the United States expressed interest, respectively, in easyJet's and Southwest's new strategies.