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BTC Blasts Lufthansa Segment Surcharge

November 26, 2008 By: George Dooley


The Business Travel Coalition (BTC) blasted the Lufthansa €4.90 ($6.31) per segment surcharge as an “ominous development for corporate travel managers” and urged travel mangers to protest the move. Lufthansa’s initiative takes effect February 1 and establishes a permanent indirect price increase by effectively shifting Lufthansa’s fully burdened distribution costs onto the backs of its very best customers, the BTC said.

In a statement, the BTC expressed outrage at Lufthansa’s scheme, “which shows a callous disregard for consumer welfare.” Lufthansa’s move means that segment surcharges will no longer be absorbed by global distribution system (GDS) vendor Amadeus.

Calling the Lufthansa move “ominous,” the BTC called on corporate travel managers to make their concerns known to the airline. The most pernicious effect of this pending cost transfer strategy is domination of the customer by first undermining and weakening the global distribution system network, the BTC said.

It then drives the customer, over time, to Lufthansa.com, where the customer will face a lack of comparison-shopping, purchasing volume and corporate travel policy. “What’s more, Lufthansa will create substantial disruption, added cost, complexity and uncertainty for all participants in the distribution chain, including the corporate travel manager,” BTC said. "Should Lufthansa succeed, other airlines would no doubt follow.”

“The European travel distribution system model should not be allowed to be dictated to the industry by one marketplace participant at the expense of all others,” stated BTC chairman Kevin Mitchell. "With the full weight of this surcharge now slated to hit corporate travel budgets on February 1, there is a brief opportunity for travel managers to demand a seat at the table. We have seen this move before in the U.S. and UK marketplaces and the ending can be positive if travel managers seize the moment and communicate to Lufthansa and Amadeus in no uncertain terms that they expect the parties to return to the negotiating table to forge an agreement that (a) puts consumers first, and (b) preserves the efficiency and full fare content of the GDS channel.”

According to BTC, this is not the time to passively watch the calendar pages tick off till 1 February, or to wait for courts to decide cases down line on uncertain contractual technicalities. Travel managers need to be smart and empowered consumers and not let events overtake them.

Visit www.businestravelcoalition.com.


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