March 24 - BTC Analysis Regarding Lufthansa Preferred Fares Program


Industry Analysis

On 3 April in Cologne, Germany corporate travel managers will convene a Customer Hearing to shine a bright light on Lufthansa’s infamous Preferred Fares Program (PFP) during the VDR Spring Conference. Members of the press expert in travel distribution will join travel managers in questioning industry participants about PFP. At the Witness Table will be one empty chair – the Lufthansa Chair – as the airline refuses to sit next to Amadeus and airline competitors and answer tough, but legitimate questions and concerns from its best customers and from journalists.

Lufthansa is obviously under pressure and following its well-worn playbook strategy of endeavoring to intimidate organizers of the Customer Hearing and running the clock down in the hope that travel-manager opposition will eventually fade and the airline’s economically lethal managed-travel model will take hold. The problem for Lufthansa is that 15 months after announcing PFP, these travel managers have not faded nor abdicated their responsibilities to their companies’ shareholders. They are insulted, angry and emboldened to protect their corporations’ interests.

Without any prior consultation whatsoever, Lufthansa announced PFP, which seeks to overturn and replace the transparent and efficient managed travel model German travel managers have worked so hard to develop over years with their travel industry partners. There is no argument that PFP represents a backdoor price-increase and raises corporations’ costs through new travel management company fees and new process costs. However, the most egregious and insulting slap-in-the-face is the arrogant message to travel managers that, we Lufthansa, are going to change the managed travel model and we are not going to consult you; we really do not care what you think.

PFP is the worst-received program in the history of commercial aviation and is cementing Lufthansa’s image as the über-bully in the German and soon, via acquisitions and alliances, the pan-European marketplace for commercial airline services. This is not lost on regulators and legislators in Brussels and Washington and is causing closer analyses of Lufthansa’s strategic ambitions.

In BTC’s view, Lufthansa needs to scrap its playbook. Customers are not competitor-enemies, but rather, the financial lifeline of the airline who need to be treated with the highest degree of respect. Lufthansa must recognize it has seriously overreached with PFP and deeply offended its best customers and distribution partners. If Lufthansa has coherent rationale as to why PFP makes sense for the customer, then we welcome the airline to the “Lufthansa Chair” in Cologne.

For additional information go to http://businesstravelcoalition.com/campaigns/pfp_background.pdf

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