Direct sales

Travel agents slam Lufthansa GDS fee plan

The German travel industry has overwhelmingly criticised Lufthansa‘s plan to introduce a new €16 GDS booking fee as “an attack on travel agents”.

The airline announced on Tuesday that the new €16 Distribution Cost Charge (DCC) will apply per ticket for all bookings made through a GDS from September onwards for flights on Lufthansa, Austrian, Swiss and Brussels Airlines (but not Germanwings or Eurowings). The GDS fee will be paid by travel agents and consumers. There will be no similar charge for bookings made directly through the websites of the airlines or other direct sales channels.

Lufthansa passenger sales manager Jens Bischoff told fvw: “The time is right for direct sales.“ At present, Lufthansa sells about 30% of its tickets directly. In future, the airline wants more leisure and business travel bookings to be made through its own sales channels, primarily the websites of the four airlines, travel agency portals and airport ticket counters.

Bischoff said Lufthansa is no longer ready to pay the high GDS charges which cost the airline an average of €18 per booking, compared to just €2 per booking for direct online bookings. “It can‘t be right that we calculate with a margin of 1.9% while the GDS firms achieve a 20% margin for their services,“ he said.

Other airlines are now expected to follow Lufthansa‘s lead on this issue, which has been compared to the introduction of zero commissions years ago.

In response, travel agents in Germany reacted angrily to the plan. The German Travel Association (DRV), which represents the bulk of travel agents in Germany, criticised the plans strongly. DRV president Norbert Fiebig declared: “This step is going in the wrong direction both for customers as well as for the travel industry.“ The move was “an attack“ on travel agency sales and “a return to moves like 30 years ago“.

Fiebig claimed that the GDS charge would hit customers and sales partners alike. “Customers have a disadvantage as this step will put up ticket prices and prevent price comparisons for travellers. Customer transparency is thus reduced. On the other hand, the workload for business travel agencies will increase massively, especially for bookings, re-bookings and invoicing for corporate clients,“ he warned.

The small independent agents association ASR reminded the airline of travel agents‘ support during the recent strikes “with countless re-bookings and time-intensive workload“. Vice-president Joachim Szech said: “This decision aims to exclude third-party sales.“He warned that agents could book competitors such as Gulf carriers more intensively as a result.

Michael Buller, president of the online travel retailers association VIR, even described the GDS fee as “a declaration of war“ as Lufthansa was trying to redirect bookings to its own sales channels.

Dirk Gerdom, president of the German Business Travel Association (VDR), which represents corporate customers, warned that the move would increase their costs substantially and would “have a massive impact on the business processes of German companies“.

The reaction in Switzerland was even more dramatic with threats of a sales boycott. The Swiss Travel Association (SRV) said: “We have now reached a new dimension that we and every member cannot and will not accept in any way.“