Airlines group further incentivises NDC and other direct bookings
Lufthansa continues to make waves in the world of travel management companies.
Not content with upsetting TMCs by the introduction of its Distribution Cost Change (DCC) in 2015, which remains the subject of various legal challenges from agent associations, the company has now thrown petrol on the flames.
On 5 April, according to reports in the German business travel press, the airline has further widened the gap between bookings made through direct and NDC channels and those made through the GDS by introducing discounts on certain classes of fares.
Starting 5 April, Economy Light and Classic return fares are reduced by €20 (or €10 one-way) on European flights from the group’s Frankfurt, Munich, Vienna and Zurich hubs. To attract the discount, the booking has to be made via an NDC interface, via Farelogix SPRK or on the airline’s own websites.
With the DCC set at €16, this makes a potential difference of €36 on tickets booked between the different channels.
The move has been dubbed by German business travel association VDR as a “Knüppel zwischen die Beine der Reisebüro-Vertriebs” – a stick between the legs of travel agency sales.
The introduction of differentials is the latest move in the distribution war which is currently being waged around the world. Lufthansa had first-mover status with the introduction of the DCC but others, including British Airways parent IAG and the Air France KLM group, have followed with their own charges.
TMCs and their GDS partners have been scrambling ever since to find ways around the charges and many have succeeded.
However, TMCs will now be wondering how they can compete against Lufthansa’s discounts and will be nervously watching the other airline groups to see if they follow suit.
Whatever the outcome, distribution in the business travel sector is changing faster than ever and no one yet knows who will “win”. What is certain is that it will not be travel buyers who will ultimately end up paying any additional costs introduced by measures which reduce efficiency in the business travel value chain.