News from Travel Technology Update: Lufthansa rocked the German travel market last week, saying it will increase fares booked through GDSs for flights departing German and Austria beginning July 1.
The fares will increase by €15 for one-way flights and €30 for roundtrips. Lufthansa will continue to offer its pre-hike fares, which it has dubbed "Lufthansa Preferred Rates," after July 1 for direct sales through its Web site, call center, ticket counter and its dedicated travel agent Web site, lufthansa-agent.com.
Travel agents can book Preferred Rates through a GDS if they agree to pay a fee of €4.90 plus VAT per coupon. Otherwise, they will have access only to the higher fares in the GDS. The carrier plans to introduce similar programs in Switzerland and Liechtenstein on Oct. 1. In Switzerland, fares will rise by 25 Swiss francs one-way and 50 Swiss francs roundtrip. The Preferred Rates fee for booking through a GDS will be 8 Swiss francs plus VAT. In conjunction with the Preferred Rates program, Lufthansa no longer will offer Web fares.
At a press conference in Frankfurt, Thierry Antinori, executive vice president of marketing and sales, said the program "will optimize our efficiency and lower our distribution costs" and "will guarantee consistent pricing as there will be no more distinction between online and offline rates." The move caught both travel management companies and GDS companies by surprise.
Amadeus, the largest GDS company in Germany, issued a statement saying, "We were informed on Jan. 17 of this decision, which was made unilaterally by Lufthansa without any prior consultation with Amadeus." Amadeus noted that not only is it inconsistent for Lufthansa to pass the entire cost of its sales and distribution onto travel agents, it seems to be taking the concept one step further: Its fee of €4.90 per coupon "exceeds Amadeus' average booking fee for Lufthansa flights out of Germany." For a roundtrip ticket, the fee would equal $9.80.
"We believe that the disruption caused by this decision is likely to harm Lufthansa's sales and increase the cost of travel for the end consumer," Amadeus' statement continued. "We will be discussing this matter with Lufthansa with the hope that a solution can be found that is acceptable to all involved."
Timothy O'Neil-Dunne, managing partner of T2Impact, a business development, technology and strategic consulting group, said Lufthansa's action could signal a "tipping point" for GDSs, particularly if another large carrier like Air France follows suit.
Airlines want to "take back control from the one-size-fits-all model" offered by GDS companies, he said. "They have tried to get the GDSs to change their ways and allow them more granularity in the offerings," he said, but were met with "huge reluctance to do that." Travel agents also must move "away from reliance on GDS terminals, particularly in corporate agencies," he said.
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