Amadeus has responded to Lufthansa's decision to charge Euro 16 for each booking made via the GDS with a letter to its customers.
The letter pushes back against the levy — which is not charged for bookings made through brand.com portals — saying unequivocally that Amadeus does not support the charge.
Sources shared the letter, below, which states that Amadeus did not know about the new charge and has yet to come to a new agreement with Lufthansa:
Amadeus has engaged in good faith with LHG for over a year with the objective of renewing an agreement with LHG to make all of its content available to the travel agency community.
While the GDS still does not have a full content agreement, there is a basic contract that allows the airline to have different fares for direct and indirect channels:
Without a full content agreement, LHG may have fare differences between direct and indirect distri‐ bution. But this does not imply that Amadeus agrees with LHG’s new commercial strategy. We be‐ lieve that this surcharge in the indirect channel will put travel agencies at a disadvantage.
Perhaps most at question here is the actual cost of distribution. Lufthansas claims that direct channels have a cost of only Euro 2, while indirect comes in at Euro 16. Amadeus feels that these numbers are simply not true, saying:
The Euro 2 direct distribution cost seems to be significantly understated. We do not know how LHG has reached this number but we believe the technology and internal costs to LHG alone for direct distribution are above Euro 2.
Furthermore, this figure seems to omit the substantial cost of online traffic acquisition, commonly understood in the industry to be Euro 15‐Euro 20 per ticket. Therefore, it seems LHG is driven by reasons other than cost.
Lufthansa's move is certainly a bold one and if other airlines see this as a smart commercial move, it could change the way that new content distribution contracts are signed with the GDS by airlines.
Current agreements are still enforceable, of course, but airlines must be emboldened if they see an opening that offers unique pricing pressure to push consumers to the direct channel.
NB: Winning fighter image courtesy Shutterstock.