THE VOICE OF THE TRAVEL INDUSTRY
THE VOICE OF THE TRAVEL INDUSTRY

Clear criticism of the travel agents against the Lufthansa best price strategy: “The price is paid by the customer.”

The travel distribution representatives within the German Travel Association (DRV) have been outspoken in their comments about the initiative of the Lufthansa Group to push from April onwards sales through its own direct distribution channels at best prices, which are offered for the first time exclusively only on NDC and Direct Connect booking channels. The reactions are unequivocal: “Lufthansa is putting a spoke in the wheel of travel agency distribution. It deprives third-party distribution of competitive prices and departs from a neutral price-performance comparison”, Ralf Hieke, DRV Vice President representing the mid-sized travel agencies, comments on the Lufthansa activities. And Otto Schweisgut, Chairman of the DRV Air Travel Committee, adds: “This is a clear discrimination against third-party distribution through major competitive advantages in support of its own distribution.” Stefan Vorndran, DRV Board member and Chairman of the DRV Business Travel Committee, criticizes in addition the insufficient technical implementation: “The technical applications which are currently available on the market are all unusable for professional flight ticket distribution, in particular in the business travel area. The connection of such tools and/or their application leads to extra expenses which are considerable.”

The DRV distribution representatives see primarily three points of criticism:

For vacationers and business travellers comparability is lost:

The key to the success of travel agency distribution is the independence and neutrality of advice. This neutrality and support at the comparison of offers are sought by the customers. This means that neutral booking systems are required. Individual connection solutions, which make comparability and transparency on the market impossible, are counter-productive in this respect. “The airlines, and in particular Lufthansa, want to depart by all means from the ‘neutral market place’ and conceal both price and service competition”, DRV Board member Joachim Horn has observed. DRV Vice President Ralf Hieke adds: “The price for less transparency is paid by the customer at the end of the day. However: The most favourable Lufthansa air fare must not necessarily be the best price on the market. Travel agencies find the best price and optimum travel times for their customers in a direct comparison of all providers.”

With Direct Connect system interruptions are caused and bookings of a travel agency through Consolidator involve extra costs with which Lufthansa prices third-party distribution out of the market:

Otto Schweisgut, Chairman of the DRV Air Travel Committee, focuses on the technical shortcomings of the individual connections: “The offered alternatives have absolutely failed to cover for years the necessary functionalities to ensure professional and efficient support for the travellers. I have the impression that Lufthansa is hardly interested in a functioning technology. It looks as if the insufficient functionality and the massive price disadvantages are to discriminate in a targeted manner against third-party distribution in the long term.”

Current field tests still show major problems concerning user friendliness and the functional scope of the Lufthansa direct booking channel of Farelogix: the list of offers is not complete, there is no possibility to combine with other airlines and changes in bookings with additional charges are often not feasible on a system level, but only through the dedicated service team by phone.  

Third-party distribution is disadvantaged:

“With its initiative Lufthansa increases the pressure on the GDS providers to work on an NDC connection or to implement it. In the business travel segment, the Travel Management Companies (TMCs) are clearly disadvantages through the further price differentiation. This additional price differentiation compared to high-street distribution will draw further business to lufthansa.com”, Stefan Vorndran, DRV Board member and DRV Chairman of the Business Travel Committee, is convinced. And Joachim Horn, DRV Board member for the midsized travel agents, adds: “The verticalization of Lufthansa distribution is pushed through, bypassing the distribution partners. In the medium term, the loyalty of the German distribution to the Lufthansa Group is likely to significantly decrease – you find out who your friends are in times of trouble and not during the current sunny moments.”