The Business Travel Coalition (BTC) has sent a forceful Signatory Letter to Lufthansa Chairman and CEO Wolfgang Mayrhuber rejecting his airline’s Preferred Fares Program (PFP). The letter charged that Lufthansa is abusing its dominant market position, and was signed by 147 corporate travel managers, travel industry associations and key stakeholders from 10 countries, 99 of which are headquartered or have operations in Germany.
The BTC letter charges that Lufthansa is shifting its entire distribution cost to the customer, representing a hidden, indirect fare increase; increasing travel management company, VAT and credit card costs for the customer; introducing substantial new inefficiencies to the managed travel process; and undermining the TMC-corporate managed travel model. The letter also charges that Lufthansa’s move would ultimately force other global network airlines to follow. The BTC says Lufthansa would have both cost and yield advantages as it drives unsuspecting consumers to Lufthansa's online booking site. Online, the consumer will be denied comparison-shopping and travel agency expertise, BTC said, and consumers will pay substantially more for tickets.
“Lufthansa is attempting to substitute its judgment for our clearly articulated preferences," the letter states. "Without collaboration, you are forcing a choice between a highly inefficient process for us and our TMCs, or paying significantly higher fares. This is a bad choice and we do not welcome your unilateral approach. Corporate travel managers, in close collaboration with their TMCs and technology partners, have developed a professional and productive travel procurement environment that must not be poisoned.”
BTC chairman Kevin Mitchell added, “This is a problem that goes well beyond the borders of Germany. We are sharing our concerns with officials in Brussels and Washington because this highly discriminatory behavior is only going to get worse as airline industry consolidation increases. We urge you to promptly forge distribution agreements that are equitable for all distribution system participants, including the corporate buyer, and that preserve the efficiency of the present TMC channel. We hereby ask you to eliminate the PFP program and rededicate Lufthansa to achieving our mutual success.”
The Signatory Letter, and scores of signatories’ pointed comments, can be downloaded at http://businesstravelcoalition.com/campaigns/lh_signatory_letter.pdf.