Mixed reactions to Lufthansa’s Distribution Cost Charge

LUFTHANSA’S 16 euro (US$18) surcharge on all bookings made through intermediaries has elicited a motley of responses from travel agencies and airlines alike.

Taking effect this September, the Distribution Cost Charge applies to bookings on all airlines in the group, including Brussels Airlines and Germanwings.

“I think Lufthansa has struggled financially in recent years and they are trying to find an additional source of income, though I think this (new GDS change) is killing the consultants who give them big volume on groups. They are doing this perhaps mainly to sell direct to end consumers,” said Tony Soorangura, associate managing director of Thailand-based NS Travel & Tours.

Angela Ng, managing director of Blue Sky Travel in Hong Kong, said: “This puts us consultants in a difficult position, especially in the existing challenging business environment.”

The cost will be passed on to all but the most loyal customers, for whom Blue Sky Travel may choose to take on the cost, she said.

But if Lufthansa’s aim is to cut out the middleman and drive more direct bookings, then the fee may have had the opposite effect.

“To save travellers the additional cost, we will encourage them to fly with other airlines,” said Abdul Rahman Mohamed, deputy general manager, channel management at Mayflower Acme Tours in Kuala Lumpur. “The Distribution Cost Charge may also result in travellers making direct bookings with the airline. But when something goes wrong, they are on their own.”

Blue Sky Travel’s Ng said: “I sold fewer Lufthansa air tickets this month and tried to offer more airline options for clients.”

Meanwhile, other agencies appear unfazed.

“My business is not affected as I rarely use the airlines… As far as I know, not many Thai consultants use their service, primarily due to their deposit and payment conditions,” said Soorangura.

Singapore-based Chan Brothers Travel’s marketing communications executive, Rebecca Chua, said impact to travel consultants in her company is “nominal” as they use Lufthansa’s online portal, which does not impose the Distribution Cost Charge.

“Lufthansa needs to understand that there are heaps of alternative airlines that we can select; if they push us hard, we just simply find alternatives and we are sure we can convince customers to follow,” said Soorangura, adding that he does not believe that other airlines will follow in Lufthansa’s footsteps.

However, when asked if Thai Airways International (THAI) is likely to take a cue from Lufthansa, a spokesperson told TTG Asia e-Daily: “It is under consideration since the implementation of the Distribution Cost Charges for GDS will affect many aspects of our airline business.”

GDS bookings make up about 70 per cent of all THAI bookings.

Most airlines that interviewed, such as AirAsia and British Airways, declined to comment on Lufthansa’s new fees.

Cathay Pacific Airways said that its “current practice with GDSs remain unchanged”, while Singapore Airlines said that it has “no immediate plans to implement extra charges”.

Additional reporting from S Puvaneswary, Prudence Lui and Greg Lowe

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