Lufthansa German Airlines is connecting its Farelogix-powered direct connect with corporate clients and expects to announce a couple of implementations "at the beginning of 2016," chief commercial officer Jens Bischof said this week at The BTN Group's Business Travel Trends & Forecasts conference in New York.
Lufthansa Group and Hogg Robinson Group are working on a direct connection so the travel management company's clients can avoid the airline group's €16 fee on global distribution system bookings. The agreement extends to Hogg Robinson Group's travel and expense technology division, Fraedom, Lufthansa announced.
Full content has become a fixture of contracts between major airlines and global distribution systems: In exchange for an airline's full range of fares, schedules and availability, GDSs provide discounted segment fees. On Tuesday, Lufthansa announced it has opted out of those established strictures, freeing it to boldly embark on a strategy to surcharge, vary content by channel, pursue alternative distribution methods and, in doing so, attract more direct bookings.
German travel managers’ association VDR has told Lufthansa Group 70 percent of its members could book away from the airline group if it introduces its controversial €16 surcharge in its proposed form and without an acceptable distribution alternative.
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.
Travel professionals might think June 2 was a bad day for the global distribution systems. When a distribution channel suddenly becomes €16 more expensive per booking for one of the world’s largest airline groups, the fear is the rest of the travel industry will look for ways to bypass that channel.
Lufthansa Group announced a radical shake-up of its distribution strategy, including a €16 fee for all bookings accepted through global distribution systems beginning Sept. 1. However, corporate customers will be able to book negotiated fares via Lufthansa’s website without incurring the fee, while travel agents can avoid the fee if they book via the group’s online portal.
With an acknowledgment that "distribution evolves," Hogg Robinson Group chief information officer Bill Brindle discussed how the TMC is treading slowly with accessing the Lufthansa Group's direct connect. This month, the airline company announced that the travel management company was among a few third-party sellers agreeing to do so.