Flight booking sites made to add fee

Lufthansa Group is to introduce a surcharge for customers who buy its flights through third-party websites.

The 16-euro ($17.80; £11.60) fee is likely to deter travellers from completing bookings on services including Expedia, Opodo and ebookers.

It marks the latest effort by the airline industry to steer customers towards its own websites.

One expert said this not only helped cut airlines’ costs but also allowed them to them promote add-on services.

However, the booking services suggest their own platforms are often easier to use and help keep prices low.

Lufthansa Group’s move will affect tickets bought for Lufthansa itself as well as Austrian Airlines, Brussels Airlines and Swiss from 1 September.

Cost savings

There are two types of travel price comparison sites on the net:

• those that act as online travel agencies, selling tickets themselves
• those that act as “metasearch” engines, which direct users elsewhere to make their purchase

Lufthansa’s move is expected to be damaging to the former, while allowing its own site to appear the most attractive option on the latter.

“The distribution cost charge will drive up the cost of tickets booked via so-called online travel agencies like Expedia or Opodo,” Martin Riecken, a spokesman for the German airline, told the BBC.

“However, it is not about… trying to discourage anyone from comparing prices.

“We rather aim for more transparency. Our rationale is twofold.

“Firstly, to allocate the high distribution cost of global distribution systems [the flight inventory and fare databases used by online travel agents] – we are talking about a high three-digit million euro amount per annum for the Lufthansa Group – to those that are actually using the services, instead of evenly distributing these cost to all passengers.

“Secondly, to take advantage of greater degrees of freedom in our sales activities, providing customers with the exact tailor-made service that they are looking for.”

Booking backlash

Opodo said online travel agencies were opposed to the move and their lawyers were already looking into the matter.

“[This] is a global issue that affects all countries and worldwide travel agencies, traditional or online, corporate and leisure, and which is already being legally examined by the associations of European agencies,” said a spokeswoman for the company.

“Lufthansa Group will clearly be the one whose most affected by this decision.

“The fact that they have not provided any automated alternative to the global distribution systems will cause Lufthansa, Austrian Airlines, Brussels Airlines and Swiss to suffer a severe lack of competitiveness against other companies that are present in these channels and don’t have an extra cost for the travellers.”

One industry watcher said Lufthansa might have felt it had to act to boost its earnings.

The company recently reported 55m euros of net profit for its last financial year, representing an 82% drop on the previous period.

Its services have also been disrupted by a series of pilots’ strikes and the crash of one of its Germanwings flights in March.

“If you look at Lufthansa’s recent performance, they have been through difficulties,” said Laurie Price, an independent airlines consultant.

“So they’ve been looking at every way to increase their bottom line. There is only so much cutting you can do.

“A better way is to generate revenue. And if you can get sales direct and offer add-ons, then that’s a much better way.”

Lufthansa Group’s stock is trading slightly higher following the announcement.

But shares in Amadeus – the Spanish travel booking technology company that serves Expedia, Opodo and others – have fallen by about 11%

Direct sales

Lufthansa’s action represents the latest in a series of clashes between airlines and price comparison booking services.

Last August, American Airlines briefly removed its flights completely from the online travel agency Orbitz in a row over fees.

More recently, the US Travel Technology Association complained that Delta Air Lines had removed its schedule and fare information from more than a dozen online travel agencies, including TripAdvisor, Fly.com and Hipmunk.

It added that the UK-based metasearch service Skyscanner had lost access to Delta’s flights as a consequence earlier this year.

Skyscanner now points customers directly to Delta’s site, benefiting the airline.

“Heightened attempts to lead travellers away from online travel agencies and metasearch travel sites is likely to lead to higher average airfares, increase consumers’ search costs, make entry into city-pair routes by smaller airlines more difficult, reduce transparency, and strengthen the market power of the major airlines,” a report prepared by a Yale professor for the Travel Technology Association said.

Delta responded saying it had the right to determine who it did business with.