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Lesley's Column

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11th April 2016

The effects of Lufthansa’s surcharge

Data compiled for the GTMC seems to answer the question we have all been asking since Lufthansa imposed a controversial 16-euro distribution surcharge last September – has Lufthansa’s market share declined?

The charge was announced by Lufthansa back in June 2015 to take effect from the 1st September 2015. In short, it is their attempt at leveraging their negotiation power with the GDS but also an attempt to change the booking pattern of customers.

However, this figure seems unreasonably high, especially when you consider that easyJet only charges £3.30.

The data, based upon a sample of 12,000 bookings made by GTMC members in the three months before and after the surcharge went into effect, shows that Lufthansa’s market share declined 8.5%.

Those numbers suggest that TMCs have switched business away from the airline group to avoid passing on the charge to their customers.

The data showed that in June, Lufthansa’s market share for UK-to-Germany bookings among the trade group’s members was 32.9%. In November, that number had dipped to 24.4%.

Meanwhile, other carriers either matched or increased their market share during that time. Lufthansa Chairman and CEO Carsten Spohr responded by saying: “We have lost some bookings outside our home markets, but this and higher GDS charges have compensated from the Distribution Cost Charge income.”

A lot of airlines would like the idea of following Lufthansa and charging for GDS bookings and Lufthansa themselves believe it won’t be long before others follow.

However, one thing is for sure – nobody will be making the move until they can establish the impact on Lufthansa and one would hope they learn from a couple of their mistakes in the process.