The airlines of the Lufthansa Group (Lufthansa, Austrian
Airlines, Brussels Airlines and Swiss International Air Lines) will add a fee
of 16 euros (about $17.78 at today’s exchange rate) to every GDS booking, starting
The airlines will not add the “Distribution Cost Charge”
(DCC) to tickets purchased through their own websites or at its service centers
and ticket counters at airports.
The company said that travel agents can book tickets without
incurring the DCC by using its online agent booking portal.
Jens Bischof, chief commercial officer of Lufthansa, said
during a media conference call about the group’s new sales strategy, “We
believe the market is ready for this change. … Somebody’s got to do it.”
“We have two strategic targets: to be able to display the
content, the price and the product in the channel we think is the most
promising for selling our product and services, and to more evenly distribute
the cost of services in the travel chain,” he said.
“We believe the market is ready for this change. ... Somebody’s got to do it.” — Lufthansa's Jens Bischof
Bischof said that the GDS channel’s high costs are not
commensurate with the value that GDSs offer in the transaction chain. Lufthansa
said that the costs for using GDSs are several times higher than for other
booking methods, such as its own direct booking portal, and that yearly GDS
costs amount to “three-digit million euros.” Lufthansa added that many GDS
services “however, are primarily used by other partners in the value chain.”
“Until now, the percentage of revenue generated from the
sale of flight tickets by our airlines has continuously decreased,” Bischof
said in a statement about the new strategy. “While other service and system
partners in the value chain are recording increasing margins and returns, our
airlines’ earnings have been compromised over time, even though they are the
actual providers of flight services. We want to counteract this trend by
refocusing our commercial strategy.”
Lufthansa also said the GDSs have limited booking functionality and that "innovative
ancillary services and enhanced price options require suitable sales
Lufthansa Group’s airlines are, therefore, in the process of developing a new
booking method to enable sales partners to connect to their IT systems directly
based on the new IATA data standard NDC (New Distribution Capability). The
first NDC pilot project is currently being tested at Swiss and should begin at
Lufthansa during the course of this year," Lufthansa said.
In a statement responding to Lufthansa’s strategy, the Amadeus
said the new model would make “comparison and transparency more difficult
because travelers will now be forced to go to multiple channels to search for
the best fares.
“[Lufthansa] has chosen to go in a different direction by
introducing charges that will penalize travelers based on the shopping channel
they use,” the statement said. “Travelers will either pay more for the same service or, in the case
that travel agencies are forced to accept this new commercial strategy by
modifying the way they access content just for [Lufthansa] , there will be
extra IT costs that may ultimately be passed on to the traveler, putting the
travel agent, and/or the end consumer, at a disadvantage.
“Ultimately, the industry overall stands to lose from this
distribution model,” Amadeus said.
Travelport said in a statement: "We believe this
proposed surcharge is not in the interests of either the end traveler or the
In a statement, Sabre said, "Lufthansa’s proposed 'cost
distribution charge' disadvantages consumers and travel agencies. The GDS is
the most preferred and efficient channel for consumers and travel agents to
shop, book and manage travel, and provides consumers with transparency, choice
and the ability to comparison shop. We stand behind the significant value
we provide airline customers and agencies around the world, and we expect to
find a mutually beneficial solution for both Lufthansa and our agency