November 2022, Virtual
21 November 2022, Hilton London Metropole
A lack of competition in the airline industry, following a wave of mergers and acquisitions, is driving the current changes in distribution.
A panel session at the GBTA Convention in Orlando heard that Lufthansa's decision to charge a €16 fee for GDS bookings from September 1, known as DCC (distribution cost charge), would not have been possible 20 years ago when buyers had more options over contracting and booking.
Diana Moss, president of the American Antitrust Institute, said: “These types of tools and techniques we are currently seeing would never have survived years ago and would be thrown out of the market, but now these ideas are gaining traction.”
She added: “This is another move by an airline to frustrate the industry, price discriminate, and hamper or harm competition and control. This could be very detrimental in forms of higher prices and less availability.”
Shane Downey, director of public policy at GBTA, believes Lufthansa will not be the only airline to look at changing its distribution model.
"The [DCC] charge is a cost increase with no benefit and rolled out so quickly that buyers can't adjust their budgets that have been set up for the year. If this is successful other airlines will follow like they did with ancillary and baggage fees.”
Charlie Leocha, president of travel law firm Travelers United, also bemoaned the lack of competition in the industry.
“Lufthansa would never be able to do this if they were 30 airlines crossing the Atlantic, but now there are only three major transatlantic carriers and they are in alliances and joint ventures,” said Leocha.
“If Lufthansa moves this forward on its own it could affect their partners in the airline alliance [Star Alliance]. But it can only happen when there is no real competition, the industry has consolidated a step too far.”
Downey added: “There are disruptors in the industry that provide benefits, but this helps no one except the airline. This could affect Lufthansa's business and if technology is rolled out too soon it poisons the well.”
Click on the GDS tag below to read more on the Lufthansa GDS charge