The slow end of Expedia et al? Lufthansa introduces €16 GDS fee

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• czechoslovakia says:

  3 Jun3 June 06:51

  This will either turn out to be a stroke o genius for LH group if everyone jumps on the bandwagon, or a swift U-turn if not.
  Can`t see the point of booking flights on the likes of expedia, as it is so much hassle to make adjustments because of schedule changes etc, anyway.
  Doesn’t bode well for the “middlemen” as they are getting squeezed from all sides. More and more, if you want the best deal – go direct.

  • erico1875 says:

    3 Jun3 June 07:15

    Ryanair are now on GDS.last year they signed up.
    This is a strange move by LH. It is going to make tjem more expensive on comparison sites. They may not even show on some

    • Aeronaut says:

      3 Jun3 June 15:59

      Re comparison sites – I don’t think that’s how it will work, rather the comparison sites will show booking direct with LH to be €16 or so cheaper than booking elsewhere.

  • Tom C says:

    3 Jun3 June 07:48

    The main benefit is that sometimes they’re able to advertise routes you cannot get on the airliners own websites, and those routes are significantly cheaper than the comparison. For example, an extra layover on a long-haul flight, which only adds an extra hour to your journey, could save an F ticket over £2k.

    • czechoslovakia says:

      3 Jun3 June 11:40

      Certainly they have their advantages, but all the same, I seem to get differing offers from Expedia, Kayak, Skyscanner and the matrix, in the same way Swiss and LH.com offer differing options, and even differing prices. Even if it means calling the airline, I`d always book direct to get the flights I want. Had too many headaches with Expedias call centre, plus don’t agree with their additional cancellation/change charges.

• Phillip says:

  3 Jun3 June 07:21

  I don’t see how the charge will make any difference to the Expedias of this world. They make pretty much zero commission on selling published fares, unless they attach a service charge. They make money out of packaged IT fares (which Expedia has been known to sell as flight only when they should be selling them with ground products as a package) and of course hotels, usually upwards of 15% of what the consumer pays! Very few airlines can compete on packages with the online agents, mostly due to the immense scope of ground product options available by the Expedias, although this is one aspect of ba.com where I think BA have done a very good job (BA Holidays) and have very keen pricing!

  • Polly says:

    3 Jun3 June 08:51

    I agree, BA packages on city breaks and holidays can sometimes seem too good to be true. But we have always been pleasantly surprised. Often paying just a few £ extra to get to a 5star property. But I think this is a strange move by LH in the current competitive market.

• Danksy says:

  3 Jun3 June 08:38

  Interesting… I’m not sure how much difference it will make, With Expedia being such a strong brand I suspect many consumers will go there first, see that Lufthansa are more expensive and book a flight with another airline.

• Jimmy says:

  3 Jun3 June 08:41

  There was a related Economist article a few years ago:

  http://www.economist.com/node/21560866

  The issue is two-fold: that airlines pay $7b in GDS fees per year; and that many of the legacy carriers sold their stakes when the Internet went mainstream because they assumed the middleman would be cut out (in fact the reverse proved true).

• Metatone says:

  3 Jun3 June 09:24

  It is an interesting one, because there are sites like hipmunk which find prices but then seem to send you to the airline site to book. I don’t know if they use Sabre or not.

  If they do, it’s hard to see how LH makes this stick.
  As an example, there is a business route that my wife flies and it’s clear that there are only 2 airlines worth checking for that route. No-one else puts on enough flights to be worth checking. So – she goes to those to airline sites and has a look.

  However, for lots of other business travel – and indeed, just about all of mine, it’s a trip to a city I haven’t been to for a while. I don’t know who flies there and how often. Hence, first stop is expedia or hipmunk to find out what the possibilities are. Would I then remember that LH is cheaper if you go to their site, or just continue with some other airline on the aggregator site? I can’t imagine that I’d make a special effort for LH (unless they seriously improve their miles program… 😉 )

• TJ says:

  3 Jun3 June 09:31

  Purely for intrigue – what do skyscanner do? Because they include Ryanair. Guessing they don’t go through one of these Global Distribution Systems?

  Also, what have Government Digital Services ever done to Lufthansa to warrant the fee?!

  • TJ says:

    3 Jun3 June 14:57

    Sounds like the places the average consumer looks won’t be subject to the extra cost but the corps will. Soft-core socialism!

  • Calchas says:

    3 Jun3 June 21:51

    FR is on Galileo and Sabre

• insider says:

  3 Jun3 June 09:51

  Working for an airline, I can see exactly why they have done this and it’s a very brave move. I suspect there will be legal battles (see American Airlines vs. Sabre) and most legacy airlines have full content agreements with GDS’s, meaning that charging a surcharge should not really be allowed. Interesting to see how Lufthansa got round this (if they even have).

  Like others have said, this could be very risky, typically c.60% or ticket sales are done through GDS’s and they are the higher value transactions (think corporates going through TMCs).

  Just an aside, the GDSs are effectively monopoly players in the regions they operate. Adding to the fact they control 60% of ticket sales for most of the legacy carriers, that leaves them in a very strong negotiating position. Annoyingly for airlines, they also charge per sector flown, so a ticket like CDG-LHR-JFK-LHR-CDG will incur the GDS fee 4 times, and the fee is not inconsiderable (LH stating €16 a booking).

• Sam says:

  3 Jun3 June 11:03

  I presume you are aware that BA were the first airline to introduce a charge? Upto £3 per segment and a lot of brinkmanship when it came to sealing the deal.

  The E16 charge will just be a negotiating tool, and will end up being nothing close to that.

  Of course low cost carriers are going in the opposite direction with Ryanair, Easyjet, Air Asia appearing on some GDS’s (but not full content – i.e.not all fares inc. their cheapos appearing).

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