Lufthansa Fees – What Buyers Should Do

NH-0815By Neil Hammond, Partner & Director of Air and Hotel Sourcing

In the last few days Lufthansa has created a bit of a stir in the travel world with its announcement that it will be passing on GDS fees directly to the consumer. Most of the commentary so far has centered on the reaction from the key stakeholders in this area, i.e. the GDSs reaction, which has been unequivocally negative. But let’s also explore what this means to corporate travel buyers and how it may impact their programs. Before we dive into that, we should perhaps remind ourselves of the details of the announcement.

What: The Lufthansa group will be adding a 16 Euro surcharge or “Distribution Cost Charge” (DCC) per ticket that is booked using a GDS. Corporate travelers can expect to see a dedicated space on the lh.com websites where they can book travel and still access their corporate discounts without being subject to this cost.

When: This fee will be introduced beginning September 1, 2015.

Who: This will apply to tickets purchased on Lufthansa and the other airlines in the Lufthansa Group, mainly Austrian Airlines, Brussels Airlines and Swiss. This will not be applied to tickets purchased on Lufthansa’s other Star Alliance or Joint Business partners for flights operated by Lufthansa group airlines.

Where: Whilst the fee is announced as 16 Euro, expect to see this applied in local currency for markets outside Germany and the Eurozone. (For Lufthansa’s official statement, click here).

So what does this mean for the corporate buyer and what should they be doing?

Well, the short answer is, not much that shouldn’t have already been done. For North American-based programs the impact is negligible as buyers can simply avoid the fee by purchasing tickets on United or Air Canada. For programs based in, or with activity in, Europe, travel buyers should take the following steps.

  1. Assess the potential impact of the fee on your current spend patterns.
  2. Review the capabilities of your TMC and online booking tool to book direct through the Lufthansa Groups DCC-free channel and aggregate the data. You will still need your travelers to book through your desired booking channels. This should be achievable in the same way that they currently handle Southwest Airlines, Easy Jet, Ryan Air and other LCCs.
  3. Ensure that bookings that have to go through the GDS are purchased on Star Alliance partners if possible to avoid the fee.
  4. Speak to your other airline partners, see if their sensitivity has increased towards more of your travel being purchased outside the GDS.

Questions? Contact Neil at Neil@goldspringconsulting.com for more information.

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