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Special fromThe Beat.
Sabre Travel Network on Wednesday said agents using its system in Germany, Austria or Switzerland would be able to access all Lufthansa and Swiss fares without paying the fees that those airlines plan to apply to some global distribution system bookings. A Sabre executive today told The Beatthat the firm's "extended" contract with Lufthansa provides fee protection for Sabre-connected agents through June 2009, assuming those Sabre users enroll in Lufthansa's and Swiss' "Preferred Fares" programs.
"We have a three-year full content agreement with Lufthansa through the end of 2009, and it had break points, essentially," said Martin Cowley, Sabre Travel Network's EMEA senior vice president. "We have expanded our agreement to include this new arrangement, which now runs until the end of June 2009."
When asked if Sabre's arrangement with Lufthansa and Swiss means Sabre no longer would pay incentives on travel agency bookings with those airlines, Cowley said, "There is no change to our commercial terms with agents."
Since Lufthansa and Sabre declined to provide certain details, the announcement left some interested parties scratching their heads.
Cowley would not comment on whether the Lufthansa deal "extension" came with new economic terms, or why it would not run for a longer period. Major U.S. airlines and GDS operators a few years ago signed new full-content deals that are scheduled to run through 2011, or in some cases 2013.
Lufthansa's stated objective is to lower GDS costs, but an airline spokesperson would not comment on how the Sabre deal accomplishes that goal. "The extension of the agreement with Sabre puts Lufthansa in a position to reduce the fee to zero euros" without minimizing the content available in the Sabre GDS, according to the spokesperson.
For bookings made through other GDSs, Lufthansa plans on July 1 to apply a €4.90 ($7.58) fee on certain one-way fares booked in Germany and Austria. In Switzerland, Swiss plans to charge a fee of 8 Swiss francs (US$7.59), effective Oct. 1.
Amadeus, which evidently was caught off guard by Lufthansa's January fee announcement, did not anticipate news of the Sabre-Lufthansa deal. "It's a very surprising situation because it contradicts some of the things we understood before from Lufthansa, that they were introducing a surcharge but that surcharge was not meant to differentiate between GDSs," said Albert Pozo, head of business travel for the Amadeus multinational customer group. "It was to be a differentiation between channels. That is radically different from what was announced yesterday."
Amadeus officials also said the Sabre deal "shows that Lufthansa is discriminating between GDSs [and] showing inconsistency with their initial announcement," which included a new, channel-specific fare structure. "Within the regulatory frame work (i.e. today's prevailing Code of Conduct) GDSs are bound to give equal treatment and conditions to all carriers in Europe. The Lufthansa-Sabre deal is a bilateral agreement and as such will have to be reviewed from a regulatory perspective."
Amadeus "hopes that a solution can be found that is acceptable to all involved and not only to some players."
In January, Travelport GDS, which runs both the Galileo and Worldspan systems, said it was discussing with Lufthansa and Swiss "the rationale for their fare structure changes."
The Lufthansa spokesperson said Lufthansa and Swiss "are always ready and open to discuss with other GDS providers."
According to HRG business technology and distribution director Bill Brindle, "I can see it can give Sabre an opportunity to get some more market share in Germany, but there's a lot to get ready in the general marketplace for systems to move across. I can't see people saying we need you to move to Sabre to get away from this. ... It is quite a change in that market to shift your business to another GDS. It just isn't that easy."
Brindle also described the Sabre-Lufthansa deal as "strange," given Sabre's stance elsewhere. "From Sabre's point of view, when you consider what they have gone through in the States, for them to say they're actually going to agree with this and do a waiver on these fees seems a bit strange," he said. "Would they do that in America?"
Sabre's Cowley said the company "absolutely in principle" is against any sort of GDS surcharge. For that reason, it has not reached an agreement with easyJet, which also is levying distribution fees, though discussions are ongoing. EasyJet previously announced participation deals with Amadeus and Travelport that include fees of up to €7.5 ($11.60) per sector.
"Hopefully with easyJet we'll come to some sort of balanced agreement," Cowley said, "unlike our competitors who, in our view, did a very quick and ill-advised deal. Our agents have been very clear that they do not like the deal that easyJet put on the table."
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