Many of us with children have faced the question: “Why do I have to wear a seat belt?” Most people use them, of course, because there’s no great alternative for keeping you alive in the event of a serious collision. Even though seat belts use very old technology, are downright confining by design and aren’t particularly in step with modern fashion, they do what they’re designed to do efficiently and affordably. And, frankly, there aren’t any better alternatives for that.

Over the years, we’ve heard airlines ask a very different question: “Why do I have to pay for distribution?” But the answer is surprisingly similar to the reason for wearing seat belts: There’s no great alternative. While global distribution systems use old technology—by Digital Age standards—and their interfaces aren’t quite as attractive as airline websites—yet—they still do what they’re designed to do efficiently and affordably.

Lufthansa Group recently announced that on Sept. 1 it would begin adding a €16 surcharge to all tickets booked by travel agents using global distribution systems. The “distributions cost charge” forces corporate customers to make a choice between higher fares and lower service.

Lufthansa argues that the rate disparity among booking channels is justified because costs for using GDSs are several times higher than for other booking methods, such as airline’s online portals. The idea of an agency portal is not a new phenomenon. Many airlines have them today, but few bookings go through them. There’s a reason for that.

What Lufthansa didn’t mention is that agency portals:

  • Are not designed to manage high transaction volumes generated by large TMCs.
  • Do not offer comparison shopping on competing airlines.
  • Lack technical integration with mid- and back-office systems that let companies keep travelers safe, track expenses and influence in-trip buying decisions.
  • Cut down travel agent efficiency and productivity, which drives up costs for travel buyers.

Over the years, I’ve been audience to a lot of negotiations between airlines and GDSs. Recently, airlines have negotiated very favorable terms with the GDSs, resulting in savings for the carriers. Leading up to Lufthansa’s DCC announcement, all indications pointed to the two sides reaching a mutual agreement over distribution. There was no indication that negotiations were not proceeding or that tension was brewing.

Read full article at:  Business Travel News