British Airways, Iberia follow Lufthansa with surcharge for GDS bookings

British Airways, Iberia follow Lufthansa with surcharge for GDS bookings

LONDON — British Airways and Iberia bookings made through indirect channels including GDSs will be hit with a £8 (approx. Cdn$14) surcharge effective Nov. 1. British Airways’ New York office has confirmed that the surcharge is effective worldwide.

The announcement from BA’s parent company IAG comes two years after the Lufthansa Group implemented a 16 euro surcharge on GDS bookings, a move that was widely criticized by travel agent groups.

In March 2017 Lufthansa CEO Carsten Spohr said he would be “very surprised” if other airlines didn’t bring in surcharges similar to Lufthansa’s. Spohr added that the surcharge, a direct hit to the bottom line for GDS parent companies including Sabre, Amadeus and Travelport, had been a major win for the Lufthansa Group since it was introduced in 2015.

Lufthansa has since negotiated direct booking arrangements with major travel agency chains. The share of direct bookings at Lufthansa’s network airlines “has continually increased” while direct booking negotiations with travel agencies and other customers “are delivering a steady stream of success.”

It’s the GDSs that have taken the hit with Lufthansa’s surcharge, and share prices for all three dropped when the British Airways and Iberia announcement was made.

Both British Airways and Iberia have made big investments in IATA’s New Distribution Capability (NDC) and both airlines say they will not levy the surcharge on GDS bookings that have NDC-approved connections. IATA’s NDC, in the works now for several years, aims to standardize how airfares are sold through travel agencies worldwide, taking into account all the ancillaries airlines now break out from their base fares and sell as add-ons, from seat selection fees to baggage fees.

The BA and Iberia surcharges will apply to bookings not made through the airlines’ own websites or direct sales channels.

“We will continue to work with the GDS providers to distribute our content to valued agency partners via existing solutions. However these systems and their traditional technology solutions currently carry significantly greater costs to BA and IB,” said the airlines.

GDSs including Sabre and Amadeus say they have been in discussions with IAG.