Lufthansa begins GDS surcharge, claims direct connectivity gaining interest
European carrier Lufthansa has not bowed to any of the industry pressure of recent months and today introduced its controversial GDS levy.
Every booking made via an intermediary using a global distribution system (Sabre, Travelport or Amadeus) will now face an additional Euro 16 levy on the fare.
Lufthansa announced in June that it would begin the Distribution Cost Charge on September 1, triggering reams of speculation as to the carrier’s motives and anger from the GDSs and travel agencies that the levy would restrict competition and would be “manifestly illegal”.
The airline says the introduction of the DCC is, in part, a manoeuvre to cut down on the three-digit million Euro amount it pays to GDSs each year, a model it claims “doesn’t have to be this way” and the industry should therefore accept “freedom in distribution”.
Some intermediaries claimed they would boycott Lufthansa as a result of the levy, but only one significant threat of a move to derail the introduction was made, namely by a group of European online travel agencies.
The OTAs included two of the big guns in Europe, Lastminute.com Group and eDreams Odigeo, alongside Travelgenio, Travelplanet24, Travix (run by BCD Travel), Unister Travel, e-Travel and Etraveli.
Three weeks ago, in a letter obtained by Tnooz to Lufthansa Group CEO and chairman, Carsten Spohr, UK-based law firm Simmons & Simmons demanded the DCC be axed and hinted at legal options available to it if the airline ignored its request.
Such moves included applying for “injunctive relief” in the courts (a legal move to halt proceedings).
However, following the passing of a August 21 deadline, Simmons & Simmons last week told Tnooz there was “nothing to report”.
Sources within the group suggested there may be a late move on Monday 31 August to stop the DCC but this has yet to come to fruition.
Although the GDSs have spoken of their disappointment over Lufthansa’s decision (Amadeus suggested the airline had lost the trust of the industry), none have officially joined any of the various groups created to oppose the DCC.
In a statement this morning, Lufthansa says it has reached a “major milestone” in a plan to modernise its “present product structures”.
It claims “direct connect booking channels are generating strong interest among industry partners”, although doesn’t detail any particular brands or services.