Lufthansa says other airlines will follow GDS surcharge move
The Euro 16 surcharge began in September last year by Lufthansa has polarised opinion amongst air ticket sellers, but its CEO claims that the move is a strategic issue about shaping the future of distribution of an airline. It is said that Lufthansa suggested fellow carriers should follow suit at a recent IATA meeting in the US.
Lufthansa claims the impact of its controversial fee imposed on bookings via Global Distribution Systems has been neutral on revenue since its introduction in 2015.
The Euro 16 surcharge began in September last year and has polarised opinion amongst air ticket sellers.
The airline group has not released any figures to date regarding how successful it has been in luring agencies away from the GDS to use a direct-connect platform to purchase seats.
But speaking at a press conference today to mark the group’s 2015 financial results, chairman and CEO Carsten Spohr says any impact following the introduction of the fee on its financial performance has been “neutral”.
“We lost some bookings in some markets due to the additional costs. We regained those bookings in some other markets.”
Although no figures were given, Spohr says the group has managed to decrease its GDS costs at the same time as increasing revenue from those that chose to pay the surcharge.
Interestingly, the rhetoric has changed somewhat since the charge was first announced last year, when the costs of distribution through the GDS were touted as a reason for its introduction.
Spohr says the surcharge was “never that much a cost or revenue issue”.
“This is a strategic issue – how you shape the future of distribution of an airline like us.”
Lufthansa is now very open about its desire to capitalise on having a direct relationship with customers, with Spohr adding:
“We need and want more direct connections to our passengers, to our customers, to our corporate customers, to have control of the data they provide to us.
“And, of course, the data usage the other way, where we can offer them tailored products which you can only offer when you have the data in your own hands.
“So it’s a lot more than the cost issue, it’s really a strategic definition of how we believe the future sales channels will be described and we are quite positive with the results.”
Spohr concedes that there was “emotional feedback” to the surcharge, but says the timing was right and the market was ready for it to make the move.
He also claims other carriers will follow its strategy.
Although no other airline has announced its intention to do so as yet, there has not been any public criticism or tacit support for Lufthansa from other carriers.
At a fiery session at the CAPA conference in Helsinki in October last year, Amadeus’s vice president of industry affairs, Svend Leirvaag, questioned if such a scenario of carriers following suit could be challenged legally by regulators and others because airlines would be operating outside of the regulatory frameworks that exist (such as the European CRS Code of Conduct).
He claimed that because Lufthansa allegedly suggested fellow carriers should follow suit at a recent IATA meeting in the US, that “theoretically” some may consider this as “collusion” by the airlines with one another.
Given the rise in temperature that often arises when such words are used, Leirvaag repeated that such a chain of events and any potential regulatory interpretation was purely “hypothetical”.
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