According to our travel-trend-tracking friends over at The Beat, Lufthansa’s spreading good news to its investors. The Beat says CEO Carsten Spohr has proclaimed the distribution strategy – charging a €16 surcharge on GDS-based bookings – “is a success.”
The German-based airline strayed from the flock almost a year ago when they declared their intention to increase the cost of GDS-sourced bookings (travel agencies use the GDS to book travel), ostensibly to offer a price incentive to those who book directly. By doing so they snubbed both the GDSs and the Travel Management community.
Perhaps most importantly, they also snubbed those loyal clients who rely on strict program compliance to maintain their duty of care and travel management success – by offering independent travelers a carrot to book outside the system (maybe to avoid the obligatory price comparison shopping that a good travel management program includes?), they’ve made a soft sell for non-compliant bookings, non-trackable travel, compromised duty-of-care initiatives, and increased ticket pricing.
Explain What That Means?
Keep in mind, when you book independent of your travel management company you’re likely losing more than the aggregated sum of all those €16 fees.
You’re losing service from your agent, you’re losing cohesive traveler tracking, you’re losing waivers and favors, you’re losing extended voiding opportunity, you’re losing an integrated itinerary, and you’re losing control of your travelers’ booking protocol – today, they book Lufthansa directly; tomorrow maybe they feel like flying Delta out of policy? (Okay, maybe we’re being hyperbolic, but you get the idea.)
Sounds like everything is peachy keen in Lufthansa land, right?
Because according to articles released in the same news cycle, Lufthansa is also crying wolf.
Weaker demand and lower sales aren’t hard to explain. Lufthansa’s choosing to point to terror attacks and economic instability (#Brexit) to justify the downturn.
Notably, they did not mention the impressive (if obnoxious and ridiculous) streak of employee strikes that have run rampant for Lufthansa over the past year. But they’re not fooling our agents who went through countless episodes of drop-everything-to-find-a-new-flight-for-this-client-who-is-supposed-to-be-flying-Lufthansa. And while we won’t go so far as to say that they’re scapegoating terrorism, it’s a bit sneaky to stand on a soapbox and proclaim global markets and global terror as your major weak points, when your pilots are picketing in the parking lot.
“…it’s a bit sneaky to stand on a soapbox and proclaim global markets and global terror as your major weak points, when your pilots are picketing in the parking lot.”
Not to mention, when you spit in the eye of the people who have fostered your company growth for decades and the loyal clients who rely on you for consistency, you’re going to lose your seats to consumer- and agency-friendly competitors.
Things Aren’t Looking Up in the Airline Industry, but Nobody’s Grounded
And no, there isn’t an airline out there today that is soaring to new heights. However, it’s good to keep things in perspective. World Travel, Inc. President, Liz Mandarino, weighed in with some insight.
“The struggle is pervasive. But to be clear, airlines are recording record profits, so nobody is suffering. And Delta, for example, is changing routes, adjusting flight sizes and schedules, experimenting with how to optimize their network. They’re the smart ones.”
So is that GDS distribution fee worth it? Well, in a big reveal that will shock absolutely no one, we certainly don’t think so. It’s just another fee to try and squeeze a profit from the end user who doesn’t have an option, while jeopardizing the established relationships that competitors are fostering and enhancing. It’s a chess move that Bobby Fisher wouldn’t approve of, because the long game wasn’t considered. Because, honestly, if you’re supposed to be racking up an extra €16 every time someone books through the GDS, AND you’re dancing at a successful campaign to get more direct bookings (which should seriously increase your bottom line, due to all the unmanaged unused tickets, the non-voidable fares, the decline of consumer loss to comparison shopping…) you’d think that by almost a year in, you’d be using stronger phrasing than, “it’s a success.”