MIAMI—A move by Deutsche Lufthansa AG to charge extra for
airfares purchased through travel agents or travel sites like
Expedia Inc. has opened a new front in the battle between airlines
and their distributors over how customers buy plane tickets.
Lufthansa's €16 ($18) surcharge—the second by a major airline in
Europe or the U.S.—is part of a broader push by carriers to direct
customers to their websites and away from fare-comparison sites, a
trend that the online-travel industry and consumer advocates say
will reduce airfare transparency. U.S. discounter Spirit Airlines
Inc. already charges $10 extra for fares bought via third parties,
and carriers including Delta Air Lines Inc. have pulled fares from
some travel sites in recent years.
At a conference this week of the International Air Transport
Association, an airline trade group, many airline executives lauded
Germany's Lufthansa. In an informal poll of IATA members in the
audience at one event, 96 of 118 respondents said their airlines
might make a similar move.
The current distribution model "needs to be addressed, and I
think what [Lufthansa] has done is a good approach," said Brad
Tilden, chief executive of Alaska Air Group Inc.
Currently airlines sell many of their tickets by distributing
their fares and schedules to travel agencies via middlemen that
charge the carriers for the service. Three companies dominate that
middleman role: Sabre Corp., Travelport Worldwide Ltd. and Amadeus
IT Group SA.
Airline executives complain that the middlemen charge too much
and have impeded change. The middlemen "are struggling with
[Lufthansa's move] because it could be the beginning of the end,"
said Tim Clark, president of Emirates Airline, the world's largest
international carrier by traffic. "You didn't do right by the
industry," he said of the intermediaries. "You made yourself fat,
dumb and happy and we've all suffered as a result, so now there's a
big pushback."
The intermediaries argue that they help carriers by distributing
fares to wide audiences and help fliers by enabling price
comparisons and more booking choices.
Travelport said Lufthansa's proposed surcharge "is not in the
interest of either the end-traveler or the airline group," while
Sabre said the move "disadvantages consumers and travel agencies"
but that "we expect to find a mutually beneficial solution for both
Lufthansa and our agency customers."
Svend Olav Leirvaag, Amadeus's vice president of industry
affairs, said his company continually invests to improve its
technology and predicted that Lufthansa's policy wouldn't pass
muster with European regulators—or the market.
"What Lufthansa is doing is contrary to the best interest of the
consumer," he said.
Some fliers' groups also criticized Lufthansa's move. The
Business Travel Coalition, which represents corporate buyers, said
German and European Union antitrust authorities should review
Lufthansa's policy as a "possible abuse of its dominant market
position." Charlie Leocha, director of the Consumer Travel
Alliance, said Lufthansa's move "is a dangerous development for
consumers."
Lufthansa Chief Executive Carsten Spohr rejected such
criticisms. "There has never been more transparency than we have
today about prices," he said.
Mr. Spohr said Lufthansa pays more than $100 million in annual
fees to middlemen like Amadeus and it isn't satisfied with their
technology. Airlines also say they can better upsell fliers on
things like extra-legroom seats when selling on their own
sites.
Lufthansa plans to enact its fee in September for all airlines
in its group, including Brussels Airlines and Swiss International
Air Lines. The company said it chose €16 because it costs €18 to
sell a ticket via a middleman versus €2 via its website.
An Amadeus spokesman called those figures "nonsense" but didn't
elaborate on the fees it charges Lufthansa.
Airlines are becoming bolder in their fight against distributors
because of new technologies to connect directly with customers and
improved finances and market positions, said Douglas Quinby of
travel-research firm Phocuswright.
Mr. Quinby expects other airlines to wait and see how
Lufthansa's policy works, leading to a gradual shift in the
industry rather than a sudden revolution.
Air France-KLM SA Chief Executive Alexandre de Juniac said the
carrier is exploring a fee similar to Lufthansa's, but that it
raises complex technical and legal issues. Most of the airline's
sales come via the middlemen, and disrupting that carries risks, he
said. The company's contract with the middlemen is valid for two
more years, he said, giving it time to watch whether Lufthansa's
move is a success.
Write to Jack Nicas at jack.nicas@wsj.com and Robert Wall at
robert.wall@wsj.com
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