As it approaches the fourth anniversary of its leading role among European airlines in surcharging global distribution system bookings, Lufthansa Group Thursday reported that direct-booking share, for the first time in the group's history, passed the 50 percent mark.
Lufthansa Group chairman and CEO Carsten Spohr this week told investors that the airline group's controversial distribution strategy, which includes a €16 surcharge on global distribution system bookings, "is a success."
Lufthansa Group's global distribution system bill has grown substantially since the launch of its contentious distribution strategy in 2015. Last year, GDS expenses rose to €449 million, according to the company's annual report this week. No bother to Lufthansa, though: Its GDS surcharge effectively shifts those costs to users.
Volume, capacity, load factor, yield (excluding currency fluctuations) and adjusted earnings all fell during the final quarter of 2015 at Lufthansa Group. Is this connected to travel trade resistance to the €16 Distribution Cost Charge for bookings made through global distribution systems, introduced on Sept. 1? The group’s annual report, published Thursday, stated, "The introduction of the DCC had a slight adverse impact on bookings, which had, however, no significant impact on the earnings position of the airline."
Lufthansa’s controversial new Distribution Cost Charge has not damaged business so far, according to executives during the company's third-quarter earnings call today.
Last week, Lufthansa Group chairman and CEO Carsten Spohr told investors that the Sept. 1 enactment of its global distribution system surcharge had been "neutral" on the company's bottom line for the third quarter but acknowledged "some headwinds" from non-home travel markets. He was the latest and highest ranking Lufthansa official to downplay the impact of its new distribution strategy.
Lufthansa German Airline's booking share among United Kingdom-based corporate travel agencies fell 8.5 percentage points following the enactment of its global distribution system surcharge in September, according to data the Guild of Travel Management Companies released Thursday.
Even before the Lufthansa Group began levying a €16 surcharge for global distribution system bookings on Sept. 1, some travel agencies and travel buyers reported that they intended to book away from the carrier. A Tnooz report published today, citing a "highly confidential document" circulating among Sabre Travel Network executives, shows Lufthansa Group carrier bookings, at least in the GDS, have indeed taken a hit in the first two weeks of September.