It is now more than a year since Lufthansa announced its controversial €16 per booking distribution cost charge (DCC). Despite industry uproar the Group has remained steadfastly positive. In its first half results it made a point of being very upbeat on the subject. It said, "The new sales strategy defined last year is starting to pay off.
"Distribution Cost Charge (DCC) levied on tickets issued via a global reservation system has been accepted by the market. At the same time, the share of direct bookings at the network airlines has continually increased."
Last week LH had more good news. It announced that Siemens was using a direct connect solution to book its corporate flights with Lufthansa Group carriers. This week it revealed that Volkswagen was also doing this.
No DCC is charged when a direct booking channel such as this is used.
It has taken more than a year but Lufthansa is now actually achieving the traction with corporate clients that it always aimed to do
Last year travel management companies and industry associations reacted angrily to the imposition of a fee on any bookings made via the GDS as it was perceived to add cost to the process of business travel management.
For its part Lufthansa is a business and felt it had to tackle the issue of its escalating cost of distribution. It faced the same challenge that all businesses do — how to manage costs without affecting the product or service that its customers want.
TMCs and industry associations have released studies claiming that Lufthansa was losing market share and that corporate clients were switching to other carriers as a consequence of the fee.
Lufthansa understandably disagreed but did so by talking about its whole market. After all, airlines also have huge numbers of leisure customers and an awful lot of independent business travellers who are not employees of large companies with managed corporate travel programmes.
These direct connects were done via Amadeus IT using cytric, the i:FAO group's online-booking solution. Lufthansa has agreements with 17 international technology providers who can provide direct connect solutions.
The anger in industry groups over DCC may — or may not — have abated. It has certainly lost profile as all these initiatives invariably do over time. And Lufthansa's new distribution model seems to be being accepted.
How soon will it be before another carrier copies Lufthansa's lead?