Referring to feedback from members, McLeod said: “We didn’t want any agent influenced by another’s opinions, but the overwhelming outpouring has left us in no doubt as to members’ feelings.”

He added: “In itself, this move may not deeply harm Lufthansa. I liken it to putting a protest placard outside the airline’s HQ to indicate our concern that this move will eventually have a domino effect on the industry.

“We’re not oblivious to the challenges Lufthansa faces, especially in the European short-haul market. The trade has to take some responsibility in trying to rebalance the cost of distribution, and that includes agents and the GDS.

With growing industry confidence in LHG’s implementation, airlines would then match the 16 Euros surcharge and begin to build the infrastructure and tools necessary for massive consumer migration to airline websites. During 2017/2018, airlines one by one could raise the surcharge from 16 to 100 Euros, or more. With this development we would expect to see the economics of online travel agencies’ collapse, traditional travel agencies’ valuations plummet, GDSs shrink and consumers greatly harmed by a severe reduction of efficient comparison-shopping opportunities followed by higher airfares and ancillary fees and harmful airline policies and practices.

August 31, 2015 3:00 PM UTC
Lufthansa Group | Group
Lufthansa Group to expand direct booking channel options

Broad interest in alternative distribution channels. Numerous collaborations with technology providers. More transparent and balanced pass-through of costs of bookings via global distribution systems from 1 September

The airlines of the Lufthansa Group – Austrian Airlines, Brussels Airlines, Lufthansa and SWISS – have reached a major milestone in their endeavors to modernize their present product structures. A number of collaborations with various partners in the airline distribution segment have been successfully pursued over the last few weeks.

The efforts to develop and establish new “direct connect” booking channels are generating strong interest among the industry partners. “The market is clearly ready for innovations and developments of this kind,” confirms Jens Bischof, Member of the Executive Board and Chief Commercial Officer of Lufthansa German Airlines. “Our realignment of our distribution has prompted an intensive exchange of views and experiences within our industry.”

“This process has had its share of controversy, too,” Bischof concedes. “But we are still as convinced as ever that offering advanced and, at the same time, substantially cheaper additional booking channels – that also allow us to better present our products – is in our customers’ best interests. For the airlines these additional booking channels are essential in order to increase their profitability”.

In the future, a greater portion of the revenue from the sale of tickets will be earned from flight operations; which is actually what the customer purchases. The percentage of revenue generated from the sale of flight tickets by the airlines has continuously decreased. While other service and system partners in the value chain are recording increasing margins and returns, our airlines have been compromised over time, even though they are the actual providers of flight services. And that’s why we consistently pursue the further development of our distribution channels.

As planned, the airlines of the Lufthansa Group are now taking a further major step in implementing their new commercial strategy by ensuring that from tomorrow (1 September), the costs of bookings made via global distribution systems (GDSs) are met more fairly and transparently by the users involved. To this end, a new “distribution cost charge” (DCC) of EUR 16 will now be applied to any ticket issued via GDS.

Customers of the Lufthansa Group can obtain their tickets without having to pay the new DCC by making their bookings via the member airlines’ websites, via an airline service center or at an airport ticket desk. Travel agents may also use the dedicated www.LHGroup-agent.com online portal as a booking alternative.

Corporate customers can continue to make their bookings at their individually-agreed contractual rates (i.e. with no DCC) via www.LH.com. Lufthansa has also concluded a new agreement with technology provider Concur, an SAP company, under which Concur will provide the Lufthansa Group’s corporate customer travel management units with special programs for managing these www.LH.com bookings from next year onwards.

“We want to work together with the travel agents and the global distribution systems to make the sale of air tickets more up-to-date, more inexpensive and more customer-minded,” Lufthansa CCO Bischof emphasizes. “And to this end we have swiftly developed a range of IT solutions that will be offered to our customers in the near future.”

The airlines of the Lufthansa Group have been particularly active devising solutions together with key technology partners that will enable them to develop and offer new “direct connect” booking channels. Parallel to this, the airlines are working on providing booking platforms for key-account corporate clients which will give them and their corporate travel agencies direct access to the air travel products of the Lufthansa Group.

While other service and system partners in the value chain are recording increasing margins and returns, our airlines have been compromised over time, even though they are the actual providers of flight services. And that’s why we consistently pursue the further development of our distribution channels.

TAs have access to a special LH website where they can make the bookings (and avoid the 16e that way). The disadvantage of this solution is that you are quite limited in fuctionality and most TAs just have all their processes based on GDS.