Travel groups seek to ground airline's third-party ticket fee

Travel groups seek to ground airline's third-party ticket fee
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Travel groups are seeking to ground a proposal from Lufthansa Airlines to charge passengers an extra fee for booking flights through third-party resources like websites Orbitz and Travelocity. 

The company is planning to implement a fee of 16 euros, or $18, on tickets booked through other means besides Lufthansa's website , ticket counters and travel agents in September. 

The Alexandria, Va.-based Global Business Travel Association (GBTA) said the fee, which the company is calling a “distribution cost charge,” will drive passengers away from Lufthansa. 

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"A poll of Global Business Travel Association (GBTA) Members shows 50 percent of travel buyers who currently include Lufthansa in their travel program as a preferred carrier plan to decrease spending with Lufthansa once this fee takes effect," the group said in a statement. 

"Additionally the poll showed 51 percent of all respondents definitely or probably will not use Lufthansa as a preferred carrier if the Lufthansa Group moves forward with the fee." 

Lufthansa has painted the surcharge as a logical response to sagging revenue from direct ticket sales as third-party booking options have surged in popularity. 

"Until now, the percentage of revenue generated from the sale of flight tickets by our airlines has continuously decreased," Deutsche Lufthansa AG Chief Commercial Officer Jens Bischof said in a statement when the surcharge was first announced in June. 

"While other service and system partners in the value chain are recording increasing margins and returns, our airline’s earnings have been compromised over time, even though they are the actual providers of flight services," Bischof continued. "We want to counteract this trend by refocusing our commercial strategy.”

The global travel association said this week that the third-party booking fee is "a direct price increase to managed travel programs with no corresponding benefit. 

"It could also ultimately lead to decreased price transparency if carried out by not only Lufthansa, but other airlines in the industry," the association said. 

Other business travel groups agree with the GBTA about the potential negative impact of the Lufthansa third-party ticket booking fee. 

"Front-line industry participants forcefully reject [Lufthansa's] attempt to abuse its dominant market position in seeking to increase revenue, decrease comparison-shopping and diminish intra and inter distribution channel competition," the Radnor, Pa.-based Business Travel Coalition wrote in a letter to Transportation Secretary Anthony FoxxAnthony Renard FoxxGeorgia Power says electricity at Atlanta airport will likely be restored by midnight Ex-Obama transportation chief on Atlanta airport power outage: 'Total and abject failure' To address America's crumbling infrastructure, follow Britain's lead MORE and his counterparts in Europe. 

"In the marketplace for travel distribution services airlines, GDSs and travel agencies are competitors," the letter continued. "So a question emerges. When a dominant participant in the direct channel intentionally, and discriminatorily, forces a 16 Euro surcharge on indirect channel participants, is it illegally using its dominant market position in both the marketplace for commercial air transportation services and the marketplace for travel distribution services to drive up the costs of its indirect-channel competitors harming them and potentially causing many to exit the market? The intent would appear to be there." 

Lufthansa's Bischof said when the surcharge was first announced that airlines have little choice but to try to boost the number of tickets that are purchased directly from them. 

“At present, airlines are not yet able to market their services via all sales channels, as it is common in other industries," Bischof said. The contracts and structures have previously prevented any deregulation in many areas. We want to change this with our new commercial strategy and take advantage of greater degrees of freedom in our sales activities, providing our customers with the exact tailor-made services that they are looking for and wherever they are looking for them.”