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Business Travel Coalition (BTC) transmitted a stern Signatory Letter to Lufthansa Chairman and CEO Wolfgang Mayrhuber rejecting his airline’s Preferred Fares Program (PFP). The clear message is that consumers forcefully reject LH’s attempt to abuse its dominant market position, a charge that will be shared in January in Brussels with DG COMP, DG TREN and DG SANCO, and in Washington with the U.S. Departments of Transportation and Justice.
The letter was signed by one hundred and forty-seven (147) corporate travel managers, travel industry associations and key stakeholders from Germany, United Kingdom, South Africa, Canada, El Salvador, United States, Netherlands, Switzerland, Scotland and France; ninety-nine are headquartered or have operations in Germany.
According to these signatories, Lufthansa is (1) shifting its entire distribution cost to the customer, representing a hidden, indirect fare increase, (2) increasing travel management company, VAT and credit card costs for the customer, (3) introducing substantial new inefficiencies to the managed travel process, (4) undermining the TMC-corporate managed travel model and (5) ultimately forcing other global network airlines to follow as Lufthansa would have both cost and yield advantages as it drives unsuspecting consumers to lufthansa.de where without comparison shopping and travel agency expertise, consumers will pay substantially more for tickets.
The letter to Mr Mayrhuber states, “Lufthansa is attempting to substitute its judgment for our clearly articulated preferences. Without collaboration, you are forcing a choice between a highly inefficient process for us and our TMCs, or paying significantly higher fares. This is a bad choice and we do not welcome your unilateral approach. Corporate travel managers, in close collaboration with their TMCs and technology partners, have developed a professional and productive travel procurement environment that must not be poisoned.”
“This Signatory Letter and comments by leading travel managers tell a story of Lufthansa’s abuse of its dominant market position. If large customers can be bullied, what does that portend for the 3.6 million small and mid-size enterprises (SMEs) in Germany, and the other 15.4 million SMEs throughout Europe?,” asked BTC chairman Kevin Mitchell. “This is a problem that goes well beyond the borders of Germany. We are sharing our concerns with officials in Brussels and Washington because this highly discriminatory behavior is only going to get worse as airline industry consolidation increases, led by LH and the Star Alliance, which has an additional request before the U.S. government for antitrust immunity for one of its new members.”
In the letter, travel managers told Mr Mayrhuber, “We urge you to promptly forge distribution agreements that are equitable for all distribution system participants, including the corporate buyer, and that preserve the efficiency of the present TMC channel. We hereby ask you to eliminate the PFP program and rededicate Lufthansa to achieving our mutual success.”
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
