It’s going to be costlier for agents to book Lufthansa product through a GDS system, as the airline introduces a new levy on outside channels.
Rolling out across all the Lufthansa Group’s airlines – Lufthansa, Austrian Airlines, Brussels Airlines and Swiss International Airlines – the group will add a ‘Distribution Cost Charge’ (DCC) to tickets purchased through a GDS such as Amadeus.
The DCC will not be added on tickets booking through the company’s website or its service centers and ticket counters at airports.
The decision, revealed this week, means travel agents will either have to absorb the additional fees, pass the cost on to customers to stop using their convenient GDS channels.
The Group’s Chief Commercial Officer, Jens Bishchof said he believes the industry is ‘ready for this change’ and said ‘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.”
Jens Bishchof, Lufthansa Group COO
He continued, saying the cost to display product on GDS systems is ‘higher than other booking methods’ and doesn’t offer the justifiable value.
“Until now, the percentage of revenue generated from the sale of flight tickets by our airlines has continuously decrease,” he said.
“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.”
Amadeus responded to the company’s decision by saying a levy on all bookings made via a GDS will penalise travellers that choose to shop via an agent.
Holger Taubmann, SVP Distribution at Amadeus IT Group, said it will also make comparison and transparency of airline costs more difficult to travellers, who will now be forced to explore multiple channels for the best fares.
“Ultimately, the industry overall stands to lose from this distribution model.”
Holger Taubmann, Amadeus IT Group SVP Distribution
“Travellers 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 LHG, there will be extra IT costs that may ultimately be passed on to the traveller, putting the travel agent, and/or the end consumer, at a disadvantage.”
