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IATA Airlines Will Follow Lufthansa on GDS Distribution Cost Charge, Says Christian Schindler

IATA Airlines Will Follow Lufthansa on GDS Distribution Cost Charge, Says Christian Schindler

“About 90% of airline chief executives attending a recent IATA meeting said that they would go the same route as Lufthansa’s new Distribution Cost Charge for GDS bookings,” Christian Schindler, Director UK, Ireland & Iceland, Lufthansa, told Irish Travel Trade News last week in Dublin. He also did not rule out Eurowings operating into an Irish airport.

As of 12th September 2015, all airlines in the Lufthansa Group (Lufthansa, Austrian Airlines, Brussels Airlines, and Swiss International Air Lines) are charging a €16 Distribution Cost Charge for GDS bookings. The new charge is not being added to flight tickets purchased through the airlines’ websites, the service centre or ticket counters at airports. Travel agencies are also able to book tickets without the DCC using the online portal at www.LHGroup-agent.com.

“We are not against GDSs – indeed, we use Amadeus in-house – but there are substantial differences in distribution channel costs and we are passing them on to the consumer and making them transparent,” added Christian. “Consumers have added value in booking with a travel agent or TMC and our new fare strategies are part of getting ready for IATA’s New Distribution Capability.”

(ITTN: A recent study commissioned by IATA of global corporate travel buyers about NDC identified buyers’ six current ‘pain points’, including: “Issues with the self-booking tool experience and concerns over the future viability of travel management companies and GDSs in their current form were mentioned.”)

New Pricing System

Lufthansa has also introduced a new pricing system across the Group for European fares, with three Economy Class fares – Light, Classic and Flex – as well as Business Class.

Lufthansa Economy Light

Lufthansa Economy Classic

Economy Light allows one carry-on bag up to 8kg, while Economy Classic allows one check-in bag up to 23kg, one carry-on bag up to 8kg, rebooking for a fee, and seat reservation.

Lufthansa Economy Flex

Economy Flex provides rebooking without a fee, a refund for a fee, seat reservation, the 23kg/8kg bag allowances, and 50% extra on award, status and select miles.

Lufthansa Business

Business allows two check-in bags up to 32kg, two carry-on bags up to 8kg, and the adjacent seat is vacant.

“All these fares are available right up to the last minute and the Economy Classic fee for rebooking is the same no matter what the fare is,” said Christian. “We are watching closely how the new pricing system is working and how it is affecting yields.

“The all-inclusive return fares from Dublin to Frankfurt, for example, are €119 Light, €159 Classic, €259 Flex and €469 Business, while to Geneva they are €67 Light, €107 Classic, €167 Flex and €377 Business. The customer can also add on elements that are not included in their fare, such as bags, seat reservation – and maybe wi-fi.

More Capacity, More Passengers

“Our capacity on ex-Ireland routes is up by 11% and passenger figures for the year to date (end August) are up 12% to 375,000 – so we will exceed 500,000 by the year-end.

“We currently have 40 flights a week ex-Dublin and will have 34 a week over the winter. Dublin – Munich is now daily and will continue so through the winter. The four weekly Dublin – Geneva flights commenced in June are selling well and will also continue through the winter. These are in addition to our three-daily flights to Frankfurt and daily to Zurich. Our load factors are in the high 80s across the board and fast approaching 90%.

“The majority of traffic on these routes is into Ireland but the outbound traffic also benefits from Lufthansa’s extensive network to Eastern Europe and Asia, particularly China and Japan, as well as Brazil – due to the excellent connection.

Lufthansa’s new Business Class

Lufthansa’s new Business Class

€3bn Investment

“Lufthansa is Europe’s biggest airline and we want to remain so. There is now heavy competition and we need to become a faster moving company. The Group decided on internal cost-cutting procedures, researched what customers want, and we are investing €3 billion in refurbishing existing aircraft.

“New First and Business Classes have been added to the already new Economy Class and recently introduced Premium Economy Class and our 106 long-haul aircraft all have our new seats.

“All our 14 A380s, for example, now offer FlyNet Wi-Fi for a fee (ranging from €9 for one hour to €17 for 24 hours) and our A320 fleet is now being so equipped – we are currently discussing free or payment options – and Austrian Airlines will commence in autumn 2016. Deutsche Telecom has a system that enables wi-fi to operate during climb and descent as well as at cruise height.

“We have also created the Lufthansa Innovation Hub in Berlin that works with and builds start-ups and digital companies with strong, innovative products for travel, such as electronic bag tags and lightweight inflight service trolleys that expand into a drinks dispensing machine.

“Lufthansa and Swiss will continue to be premium and hub carriers, while Eurowings is being relaunched as our short- and long-haul low-cost carrier.”

Eurowings Aircraft

Eurowings

In November 2015, Eurowings, which since the 1990s has been flying short- and medium-haul routes as a subsidiary of Lufthansa, will become the new brand for Germanwings, which has operated as Lufthansa’s low-cost airline since 2002, was relaunched with new brand and product concepts in 2013, and is now Germany’s third-largest airline with some 16 million passengers.

Eurowings will be flying to many new destinations in Europe and also add long-haul flights, including low-cost services from Cologne-Bonn to Dubai, Bangkok, Phuket, Dominican Republic, and Cancun.

“Next month Eurowings will add a new base in Vienna with two aircraft and we expect the airline to become the number three low-cost carrier in Europe.” In response to a question from ITTN, Christian added: “No, I wouldn’t rule out Eurowings flying into an Irish airport.”

So will we soon see a service from Cologne-Bonn or Vienna to Belfast, Shannon or Cork?

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NEIL STEEDMAN has been a trade journalist, copywriter, editor and proofreader for 50 years, and News & Features Editor for ‘Irish Travel Trade News’ for the past 40 years.

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