Lufthansa has seen “very little” negative effects since the introduction of the controversial €16 GDS fee.
The German airline said there had been a “small to no impact” on corporate business with the introduction of the Distribution Cost Charge (DCC).
However, bookings have been hit on the ‘low-revenue’ European market where an extra €16 can be a big difference on the price of a flight.
The update from Lufthansa came at a media briefing where Lufthansa’s VP sales Europe, Heike Birlenbach, announced Andreas Koster as the new senior director of sales UK, Ireland and Iceland. He replaces Christian Schindler who is moving to head of sales and services Europe for the LSG Lufthansa Service Holding AG based at Frankfurt airport.
The DCC charge was brought in last year and is applicable to all bookings on Lufthansa, Austrian Airlines, Brussels Airlines and Swiss not made through one of the company’s own channels such as Lufthansa.com.
“Bookings have not been hit on the corporate side but the area where we really saw an effect was on the low-revenue European routes where the price sensitivity is very high and 16 Euros is a very big difference,” said Birlenbach. “This is different on the corporate arena and long-haul and so therefore the effects are as we expected them. We don’t have any other negative figures about the DCC.”
She also said there “had not yet been a breakthrough” in the UK where agencies were using a direct connection for booking tickets and admitted it had a been a “rather slow start”. However, Birlenbach said they have direct connections in markets where they didn’t expect like Russia.
Lufthansa’s Birlenbach also reiterated the fee “symbolises” the amount of money needed to pay in addition for bookings made on the GDS… “There is no plan to increase it, the distribution strategy is not about the charge it’s an effect caused by the cost and we simply compare the cost for booking without a Global Distribution System - a major electronic worldwide reservation system used by travel agents to book flights, hotels, car rental and other travel services. The major players in this area are Sab... Vs booking via the Global Distribution System - a major electronic worldwide reservation system used by travel agents to book flights, hotels, car rental and other travel services. The major players in this area are Sab... and that makes it a lot more transparent for the customer.”
Lufthansa said there had been no effect yet on revenues from Brexit but added there was a concern over the uncertainty the vote has placed on businesses. “For now we would rate the effect as neutral, so currently there is no capacity adjustment for the UK market. We are still discussing growth activities for next year. There might be some capacity shifts in terms of size of aircraft and nothing yet on new destinations,” said Birlenbach.
There has been talk over the past few months about Lufthansa’s premium economy product. Birlenbach said she couldn’t say anything yet but added “it’s in the approval process right now and there is a likelihood there will be an expansion on Lufthansa and one of our other airlines. We cannot disclose more details once we know that it’s going to happen.”