STATEMENT
Transcription
STATEMENT
STATEMENT For Immediate Release Business Travelers Worldwide Reject Lufthansa’s Preferred Fares Program The German carrier is abusing its dominant position by unilaterally forcing its undesirable program on consumers Brussels, Belgium, 17 December 2008--Business Travel Coalition (BTC) today transmitted a stern Signatory Letter to Lufthansa (LH) 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. The Signatory Letter, and scores of signatories’ pointed comments, can be downloaded at http://businesstravelcoalition.com/campaigns/lh_signatory_letter.pdf According to these signatories, LH 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 LH 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.” ### 1 CONTACT BTC || Kevin Mitchell | 610-341-1850 | mitchell@BusinessTravelCoalition.com About BTC Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. 2 17 December 2008 Mr Wolfgang Mayrhuber Chairman and Chief Executive Officer Deutsche Lufthansa AG Airportring 60546 Frankfurt Dear Mr Mayrhuber, As major Lufthansa customers headquartered in Germany and around the world, we are writing to express our anger over your airline's imposition of an indirect fare increase of tens of millions of Euros through your Preferred Fares Program (PFP), which will include increased VAT and credit card costs as well as travel management company (TMC) handling fees. Worse, your PFP surcharge will undermine our existing highly efficient corporate travel procurement processes by requiring customers to create new infrastructure and workaround procedures. We will be forced into an expensive and inefficient case-bycase analysis of which fare is more economical to purchase -- either a PFP fare with a surcharge and a TMC handling fee, or a standard fare offering. 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. The marketplace for commercial air transportation services is now highly transparent as a result of this longstanding and mutually beneficial collaboration. Complete fare information and point of sale functionality are now on one screen for both TMC agents and travelers utilizing automated booking tools. Now, travel managers can use this advanced purchasing process to drive business to preferred airline partners down to the city-pair level. Your initiative to damage the existing TMC channel and its supporting technology partners; undo our progress in developing efficient, best-practice processes; and once again endeavor to dominate the point of sale is a flawed strategy strongly rejected by your very best customers. We need to find ways to strengthen our preferred channel, not weaken it. Such negative actions on your part will make it more difficult and expensive for our companies to continue purchasing your product. Our companies, with air travel needs in markets where you are strong, and in markets where you seek to grow, will direct future business to airlines that build their distribution programs around our preferences. As the 1 attached comments from many of us directly to you reinforce, and you are no doubt aware, we do have a choice in air travel. 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. Sincerely, German Business Travel Association (VDR) Institute of Travel Management (ITM) Scottish Passenger Agents Association (SPAA) Business Travel Coalition (BTC) Merck KGaA SAP AG Deutsche Bank AG BMW AG ABB Ltd Philips Ingersoll Rand Munich Reinsurance Company German Armed Forces - g.e.b.b. Carl Zeiss AG Panasonic Electric Works Europe AG AMB Generali Group Germany HRG Worldwide TUI 4U OTTO (GmbH&Co. KG) Honeywell ConocoPhillips Germany GmbH Roche Pharma AG Deutchland Baxter Beutschland GmbH Johnson & Johnson Dow Europe Toyota Motorsport GmbH NetJets Europe Novartis Pharma GmbH Olympus Europa Holding GmbH Otto Bock Holding GmbH & Co KG Telefónica o2 Germany GmbH & Co. OHG SAS Autosystemtechnik Verwaltungs GmbH TravelBoard GmbH Bayer AG Schaeffler KG SCHOTT AG SAS Institute GmbH Perot Systems Corporation Assurant AT Kearney, Inc. Ball Packaging Europe Holding GmbH & Co. KG Bavaria-Lloyd Reisebüro GmbH/BMW AG Atos Origin August Storck KG Beiersdorf AG Berlin-Chemie AG Sanofi Pasteur MSD GmbH Hannover Rückversicherung AG SIG Combibloc GmbH Logwin Logistics Vattenfall Europe AG Roche Diagnostics GmbH Linde Maschinenfabrik Gustav Eirich GmbH & Co KG Medis Medical Imaging Systems bv Travelagency M45 eBAECO NV BEUMER Maschinenfabrik GmbH & Co. KG Business Traveller Africa DC Francotyp-Postalia GmbH ProSiebenSat1. Media AG Wieland-Werke AG Yale University ZDF AAA Allied Group, Inc. Adolf Würth GmbH & Co.Kg Agencia de Viajes Escamilla All About Travel, Inc. Alstom Deutsche Gruppe Amway Travel Anthony Travel, Inc. Arcandor AG Derpart Reisebüro Koch Übersee GmbH Diehl Stiftung & Co. KG DMR Touristik 2 ECE Projektmanagement G.m.b.H. & Co. KG EnBW Energie Baden-Württemberg AG DMR Touristik ECE Projektmanagement G.m.b.H. & Co. KG EnBW Energie Baden-Württemberg AG Alstom Deutsche Gruppe Amway Travel Anthony Travel, Inc. Arcandor AG Derpart Reisebüro Koch Übersee GmbH Diehl Stiftung & Co. KG DMR Touristik ECE Projektmanagement G.m.b.H. & Co. KG EnBW Energie Baden-Württemberg AG Endress+Hauser AG Medis Medical Imaging Systems, BV Ingenics AG Innovative Business Concepts J. Eberspächer GmbH & Co. KGjetamel Loos International GmbH Novelis AG Oerlikon Textile GmbH & Co. KG BJI, Inc. Boscov's Business Travel Boyd Consulting Bucyrus International Cadence Design Systems, Inc. Caldwell Travel, Inc. Casto Travel Center for Creative Leadership Cereal Chillers Inc. CHAMELEON GLOBAL CI Travel CorpTrav Country Functions / Shared Services Cox Enterprises, Inc. Cresta World Travel Eton Travel Eton Travel Agency Limited Graphic Packaging International, Inc. HealthCare California International Brotherhood of Teamsters Just Travel Inc Kendle International Inc. Liberty Global Europe LIMRA International Lubrizol Limited LVMH Travel/Linden Travel Bureau LXR Travel LLC Matrix Travel Management NetApp Norseman Travel Corporate Travel Partners Limited P&P Associates Ltd International Travel Management Pearson Precision Power Labs Procurement Sapient Corporation SEB AG SICPA SA SMS GmbH Software Solutions Sony Europe GmbH Tanger Factory Outlet Centers, Inc. Teplis Travel Service The Arvai Group, Inc. The Corporate Travel Partnership The University of Texas at Austin Thermo Fisher Scientific TMD Friction Services GmbH Town & Country Travel Travel Management Alliance and Austin Travel, Inc. Alexander Anolik, A Professional Law Corp Travel Time Travel Agency, Inc. Uniglobe Normark Travel Inc. Travel Leaders Warner Bros. Entertainment Inc. QA Business Travel Red Lion Hotel on the River Ricoh Americas Corporation RMIC Corporation Sanmina-SCI 3 Attachment Comments From Signatories to the Lufthansa Letter In A Word! • “It's a nightmare!” • “This is a divide and rule strategy.” • “Wrong!!!” • “This is pure bull**** without any service or customer relations.” • “This idea should be abolished.” • “Why is Lufthansa not honest?” • “We totally support BTC's position.” Immediate Harm • “This is a hidden price increase.” • “This is an indirect increase of rates - additional costs for corporates.” • “This is a big increase of process costs and loss of transparency.” • “LH is again raising fares with this means and the companies have no real option but to pay.” • “Additional costs - no actual cost overview by LH (hidden cost-transfer strategy).” • “We will see a decrease in business travel to our area if the airfares continue to climb for any reason.” • “PFP is negative for corporate clients.” • “It is another hidden rate increase and makes administration processes unnecessary complicated.” • “The new model is not acceptable, it will lead to an increase of both direct and indirect costs.” 4 • “I can´t understand why Lufthansa makes a price rise that difficult. These new processes make much more work for all of us. It costs a lot of time and money. Bull****!” • "Hidden cost increase and (much more important) PFP is damaging our processes." • "This is a way to increase prices and keeping the structure of how a ticket is build up non-transparent." • "That we lose our "level playing field" on the GDS. It's already become more difficult. The cost we see and quote is not the cost to passengers anymore." Abuse of Dominant Position • “It will massively increase the costs to the travel industry, create more work and produce less transparency on fare costings. The industry is being bullied into submission.” • “It is a de facto fare increase on the consumer, driver of inefficiencies in the travel industry and there is no value add to the consumer. This is solely the work of an airline taking advantage of (or abusing) its dominant market power.” • “As the model is highly inefficient for all but one market participant, and creates no additional value besides cost for the final customer, I see it as an inadequate measure to change existing market rules. Process costs will be driven up in addition to the primary cost in this model. There are certainly more intelligent solutions on the table also taking into consideration GDS incentive payments to TMCs. The fact that this model is launched in the home markets of LH/LX is obviously driven by the opportunity to play with pure market power in an oligopolistic situation.” • “This is yet another airline scheme to defragment a consolidated travel program. We will be forced to pay higher fares, higher fees or lose visibility and reporting if booking online at LH.” • “By implementing this programme, Lufthansa forces the market to increase prices. We are the loser!!!” • “Fare increase and unfair treatment of customers and several distribution channels. Unilateral approach of LH to force this idea on the customers and GDS providers.” • “Open channel for fares is critical to any organisation. No supplier can be allowed to establish a quasi monopoly position at the expense of the consumer.” 5 • "Market power misuse of home carrier. Adds complexity and costs to travel agents. Creates price disadvantage to LH.com." • “Lufthansa forces the Business Travel Centers to only use the airline's sales channel. No price transparency given GDS like Amadeus (most important and biggest within Germany and Europe) must pay, others - like Sabre and Travelport must not pay. Discriminatory! Combination of an official and hidden price increase.” Setting A Dangerous Global Precedent • “It is a precedent that should not be set.” • “The effect this would have on the bigger picture with other carriers following suit is frightening.” • “If LH is successful, the rest will follow suit and, God forbid what air prices and fare options would ultimately look like. The carriers have been yearning for the past 30 years to get back to their halcyon days when 70% of their business were direct purchases. Can you imagine First Class and Full Coach fares as the only options for the business traveler, or, at minimum, a situation where the GDS fares were higher than what the carriers sold themselves? It wouldn't take too long for them to start squeezing their best customers. The carriers cannot serve the general public much less corporate travel programs that offer all the conveniences of 1-stop shopping, negotiated discounts, and preferred supplier relationships. They're not intent to build a better mouse trap but rather destroy the only one that works!” • “My concern is the precedent this change would put in place.” • “It will instigate further backdoor increases across the airline network.” Brave Resistance • “Again Lufthansa is behaving in a monopolist's manner. We will certainly take more efforts to avoid flying them.” • “I do not agree with this strategy and am not willing to accept it.” • “The processing costs for me and my travel agency will explode and LH tickets will be far too expensive. The solution for me is to actuate my flight volume to alternative carriers like Air Berlin, Germanwings and Tuifly! My travel policy will support it because I have to buy the cheapest fare which applies. I will not take part at the preferred fares program so LH will be a lot more expensive than other airlines!” 6 • “This is an indirect fare increase and this means, on top, much more work. In times where everybody has to reduce costs this program is not bearable and it leads to book other airlines.” • “It is a disguised way of pushing GDS and other fees to agents and customers. 100% unacceptable; I will sell away from LH if it moves forward with this.” “It is a scheme which would drive me away from using Lufthansa again.” • Attempting To Destroy the TMC Channel & Managed Travel Programs • “This is not in the best interests of the corporate travel industry.” • “Increase in cost to work through a TMC.” • “It will cause confusion and dilute buying power by splitting the procurement channels.” • “Lufthansa is complicating the processes and is trying to own the point of sale, after they identified that the tools from GDSs and online technology providers can bias the purchasing display in a way which has an impact on Lufthansa yield structure.” • “Short sighted and damaging to our mutual clients. Distribution costs should be built into the fares for web and GDSs alike. Do not penalize your customers who use TMCs.” • “Undermines the distribution system and raises costs.” • “The Lufthansa Preferred Fares Program is adding a lot of unnecessary complexity and cost to travel programs. It is also disappointing that LH implemented this program without having consulted any of their customers in the industry (corporates and agencies). PPF puts a huge pressure on our managed travel program, and this by a 'partner' of our program; totally unacceptable.” • “The current distribution system works very well. It is efficient, low cost, and fair to all. Other industries understand that distribution is part of the cost of doing business and the customer understands that it is currently included within the ticket cost.” • “Travel fares have been confusing enough without adding this additional level of complexity. Eventually, our TMC will get to the least expensive option for the customer, but the time involved in doing so will doubtless increase the costs of the services they offer their customers.” 7 • “This is a price increase for end users, either companies or private customers, which are not compensated through a decrease of the airline fare. The customer end fare goes up and the only choice for the customer is to accept the fare increase a) 30Euro plus or b) 4,90 per transaction. The customer gets sandwiched between the interest of the GDS provider and airline.” • “PFP is a solution looking for a problem. When compared to nearly any other industry the current distribution system is in actuality highly efficient, lower in cost, and reasonably fair to all concerned parties. Many industries would benefit to replicate--not destroy--what is already in place.” • “As LH does not reduce the airfares and puts the additional fees on top, it is not appropriate. Especially in these times, it is not fair to hand over the costs to the customers. But this is not the only sector. What about fuel and security surcharge??? The prices become more and more intransparent and this has to be stopped.” • “I don't agree with it at all and think it should be abolished. It's nonsense passing all your costs to the customer and then charging them airfare as well, In all other industries you pay the price for your goods full stop. You don't then pay all the costs associated with the manufacture of those goods as well. It’s a total cop out by LH!” • “This PFP from Lufthansa is yet another example of how airlines simply pass on their distribution cost as a surcharge to the end consumer. There should be equal and fair distribution amongst all channels.” • “If Lufthansa has increased costs in logistics they have to calculate their prices accordingly. We are only interested in complete price calculations and are not willing to pay any extras for other services. Market comparison prices, which include everything, are necessary as to our opinion.” • “Extremely against! Inefficient processes for TMCs and companies!! Cost increase for GDS fee, TMC processes and company processes, communication and IT solutions. Lack of understanding for such a difficult method.” • “The total process cost will negate the reduced price and add complexity that is only for the benefit of LH and to the disadvantage of CRSs and the end customer.” • “Another anti-consumer, anti-agent misjudged attempt to obtain additional funding at the expense of consumers.” • "The current distribution system works very well. It is efficient, low cost, and fair to all. Other industries understand that distribution is part of the cost of doing business and the customer understands that it is currently included within the ticket cost." 8 Inequitable Treatment • “I am looking for Lufthansa to be a fair business partner for all stakeholders and consumers.” • “Lufthansa is penalizing their best customers, who typically pay premium fares already.” • “I think in this economy, it is an insult to the integrity of our industry.” • “Don't make the cost of travel less attractive than it already is with more punitive fees.” • “Unfair pass through to the clients.” • “Not fair.” • “Fuel costs have dropped radically. The increased costs were what prompted many of the actions the airlines were taking. How do you justify taking this position?” • “It is unfair to shift distribution costs to customers especially in the business sector given this is a great source of their income.” • “Intransparent pricing and double fees as GDS fees were already calculated and are included in current prices.” • “We didn´t have any true understanding of this problem.” • “It´s a mess - unfair against all travel agencies, all sales agents.” • “The corporates become once more the playing field for suppliers. In the end the corporates pay the bill! Years ago it was the commission cut; now it is the PFP...my question is now: What comes next?” • “Companies as we have to pay the bill. We are not able to choose the best, as LH is the market leader.” … 9 Mr. Kevin Mitchell Chairman Business Travel Coalition 214 Grouse Lane Radnor, PA 19087 December 15,2008 Re: Your communications regarding the Lufthansa Preferred Fares Program Dear Mr. Mitchell: On behalf of Lufthansa, I would first like to express our respect for the goals of the Business Travel Coalition and an appreciation for your advocacy on its behalf. In addition, thank you for taking time out to speak to me and establishing a platform for dialogue with respect to the issues raised by your recent communications regarding the Lufthansa Preferred Fares Program (PFP), As I have related, we are very concerned about your portrayal of the PFP in your December 9, 2008 email-newsletter to members of the Business Travel Coalition and in other similar communications. The information that you are disseminating within the travel industry community is inaccurate in large measure and misleading. Your communications neglect to provide the reader with a complete and accurate picture of the PFP; the business travel community deserves better and we urge you to provide complete and accurate information to them. Accordingly, we want to take this opportunity to provide you with the following clarifying explanations so as to establish a full and accurate depiction of all of the specifics and goals regarding the PFP: . Contrary to your claim that the Preferred Fares Program "will increase corporate customers'cost and undermine the highly efficient processes ..." travelagencies booking a Lufthansa Preferred Fare for their customers through the CRS Sabre, Galileo or Worldspan or the Lufthansa online booking platform for travel agents (www.lufthansaagent.com) will have the same fares available at no additional costs. The same applies for customers directly booking via Lufthansa.com, any Lufthansa call center or at Lufthansa's ticket counters at the airport. Lufthansa applies a fee only in the event costs with a GDS are disproportionate high and this fee is collected exclusively from the travel agency. . The Preferred Fare Program leads to efficient sales structures and transparency within the trade. Travel agencies have always asked for full access and availability to Lufthansa fares. In line with this requirement, all Lufthansa fares will be available in one system - the CRS - and do not have to be first sought out by travel agencies in diverse systems, like the Internet, CRS or other booking tools (such as search engines) for the purpose of comparing prices. This will prevent further fragmentation of market prices and travel agencies will thus retain the advantages of issuing tickets through the CRS. This is by no means a burden for any travel agency but a clear advantage when compared to making bookings for carriers such as "Low Frill" carriers or any other Non-GDS carrier. For your better understanding, the PFP was implemented in Germany, Austria, Switzerland and Lichtenstein and onlv for those points of oriqin. Principally, GDS subscribers in the US who are selling O&Ds originating in those European markets, will not be assessed a Lufthansa GDS segment fee but will have access to the published fare. lf the CRS prices, such as in the case of Amadeus, are excessively high, free access to Lufthansa's Preferred Fares is not possible. Correspondingly, the travel agencies - the core users of any CRS - have to make their contribution and will be assessed a Lufthansa GDS segment fee. Alternatively, travel agents can sell the published fare. Again, by the agents own choice, all Preferred Fares are available without a fee through Galileo, Worldspan or Sabre. In general, each travel agency can decide at its own discretion, which booking channel or CRS it wants to use and whether and in which form further charges will be carried out to the end consumer. You should also be aware of the fact, that the PFP is not a new idea in the travel industry. U.S. and British carriers have already introduced similar models to counter the growing fragmentation of fare information in various Global Distribution Systems (GDSs) and also to reduce costs. . Lufthansa remains convinced of the added value and technical efficiency of GDSs for our sales and distribution, but the commercial model of this system needs to change to find ways to make sales via GDSs more cost-effective in the future, too. In consequence, the PFP also ensures our efficiency in the future and will make Lufthansa continue to be a stable and reliable partner for both, our customers and our travel agencies. We therefore strongly disagree with your statements and object to the misrepresentations in your communications. Lufthansa is neither damaging nor discriminating against the existing TMC channel or any supporting technology partner. Accordingly, we are requesting you to reissue your communication to the business travel community setting the record straight by providing accurate, complete and objective information regarding the PFP and withdrawing your proposed letter-writing campaign. We feelthat the business traveler community deserves to have all of the information before them. Your portrayal of the PFP does not reflect well on Lufthansa and such misleading statements are not in the best interest of your constituents and cannot be tolerated. Rest assured that we are in constant dialogue with our customers regarding this and other issues pertaining to their business travel needs. Lufthansa's aim has always been and shall continue to be to provide the best possible travel experience to our clients and support the most efficient way to distribute tickets to them. I trust that our explanations and goals are now clear to you. Please let me know if you have any further questions. Thank you. Sincerely, &4 Lufthansa German Airlines Don Bunkenburg