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BTC Blasts New Lufthansa PolicyDecember 10, 2008 By: George Dooley
Kevin Mitchell, chairman of the Business Travel Coalition (BTC), has sent a letter to Lufthansa’s chairman and CEO protesting Lufthansa’s introduction of the airline's Preferred Fares Program (PFP). The BTC said the new program would increase corporate customers’ costs and undermine the highly efficient processes that have become the signature and goal of modern travel management.
Mitchell urged U.S. agents to sign the letter, charging that Lufthansa (LH) is “imposing an indirect fare increase of tens of millions of euros through its PFP, which will also include increased VAT (Value Added Tax) and credit-card costs as well as travel management company (TMC) handling fees.”
“If LH is successful in shifting virtually all of its distribution costs to its customers, undermining the best practices of corporate travel managers, and tilting the competitive playing field to its advantage, other global airlines will have little choice but to implement similar programs,” Mitchell said.
“I ask that you to consider joining colleagues from around the world and lending your name to the Signatory Letter,” Mitchell said. (Agents can approve the letter at http://tinyurl.com/6xhgwg.) The goal of the Signatory Letter is to encourage Lufthansa to forge distribution agreements that are equitable for all distribution system participants, including the corporate buyer, Mitchell said. One goal is to preserve the efficiency of the present TMC channel.
The BTC offered background on the issue: “In January 2008, LH announced PFP for gradual phasing in beginning 1 July 2008 in Germany, Switzerland, Austria and Lichtenstein. To make the PFP program deceptively 'attractive,' LH raised its standard fares by 30 euros for a round trip while offering the lower, original fare structure via PFP wherein a 4.90-euro per-segment surcharge would be applied. As such, a 4-segment roundtrip would cost 19.6 euros under PFP, compared with a 30-euro fare increase.
“Once it determined that the LH surcharge was part of a larger TMC channel discrimination initiative, Amadeus announced that it would absorb the surcharge on behalf of its TMC subscribers until at least the end of 2008, while it pursued a resolution via negotiations with LH. Amadeus recently communicated its decision that on 1 February it will cease absorbing the LH surcharge,” the BTC said.