19 Mar 2017

Lufthansa Calls Direct Booking a Success as British Airways Is Poised to Copy It

The airline industry has been watching Lufthansa’s performance since summer 2015, when it launched a major investment and commercial effort in direct-booking connections with the corporations and travel agencies that buy high volumes of its tickets.

International Airlines Group, parent company of British Airways and Iberia, may make a similar move this year, according to interviews on a background basis that Skift did with industry executives and investment analysts.

If it does, British Airways will benefit from the work the German flagship carrier has done. By pushing direct connections to travel agencies that don’t book direct, Lufthansa has prompted many travel management companies (TMCs), other travel companies, and aggregators to develop the “middleware,” or technical plumbing and data feeds, needed. Now that those connections are becoming available, they could be used by other airlines, too.

And Lufthansa also did the hard work, risking the ire of travel agents, by imposing a surcharge on bookings that weren’t direct.

Some industry observers thought Lufthansa would lose millions of dollars and significant market share after it added a 16 euro ($18) fee on bookings that go through the large booking software companies — Amadeus, Travelport, Sabre, and Travelsky — used by tens of thousands of travel agencies worldwide.

Lufthansa says the impact of the surcharge has been negligible.

In the past year and a half, Lufthansa has signed up more than 100 travel companies, aggregators, and technology providers to its alternative, direct channel. That’s the most extensive effort at direct connections of any carrier since American Airlines tried — and failed because of resistance — to install direct-connect technology with agency customers half-a-dozen years ago.

Airlines have balked at copying Lufthansa’s move until they see how well it does. Lufthansa is now saying that it is having “success.”

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