As part of an overall change in its commercial strategy, the airlines of the Lufthansa Group (LHG) have announced that they will begin charging a "Distribution Cost Charge" (DCC) of EUR 16 for every ticket issued by a booking channel using a GDS.
The change is part of an overall strategy shift by the Lufthansa Group airlines -- Lufthansa, Austrian Airlines, Brussels Airlines and Swiss International Air Lines (SWISS) -- that focuses on earning a greater portion of revenue from flight operations, as opposed to ticket sales.
Presently, the costs for using GDS are several times higher than for other booking methods, such as Lufthansa's online portal at www.LH.com, LHG said in a statement announcing the decision. As a result, the airline group will add a EUR 16 DCC to every booking channel using a GDS. The new charge will not be added to flight tickets purchased using the group's own booking channels, particularly the airlines' websites, as well as the service center and ticket counter at the airports. Travel agencies will also be able to book tickets without the DCC, using the online portal at www.LHGroup-agent.com.
Jens Bischof, chief commercial officer of Lufthansa German Airlines, tells Travel Agent that, for agents who receive a commission when booking via GDS, the agent will continue to receive whatever incentives he or she may now be receiving from the respective GDS accordingly.
The group has not yet heavily marketed the agent portal, but will now shift gears, says Bischof.
"It's an alternative, an addition," Bischof says. "It's not about penalizing any one channel."
Lufthansa Group airlines have said they are also in the process of developing a new booking method to enable sales partners to connect to their IT systems directly based on the new IATA data standard NDC (New Distribution Capability). The first NDC pilot project is currently being tested at SWISS and should begin at Lufthansa during the course of this year, Lufthansa said.
Amadeus has released a statement criticizing Lufthansa's decision.
"Travelers today are looking for consistency, transparency and choice across all channels and we as an industry can deliver that best by connecting and integrating all players," Amadeus said. "LHG have chosen to go in a different direction by introducing charges that will penalize travelers based on the shopping channel they use."
Amadeus charged that travelers would either end up paying more for the same service or, in case travel agencies modify the way they access LHG's content, here will be extra IT costs that may ultimately be passed on to the traveller, putting the travel agent and the traveler at a disadvantage.
Amadeus also argued that the new model would make comparison and transparency more difficult because travelers would now be forced to go to multiple channels to search for the best fares.
What do you think LHG's new plan means for travel agents and the travel industry? Let us know in the comments below.