UFTAA initiates investigation on legality of LUFTHANSA Group initiative

There are a lot of initiatives going on in the market opposing the Lufthansa Group’s decision to introduce a reservation fee on bookings made through the official GDS’s.

UFTAA is of the opinion that this move is unfair and anti-competitive. UFTAA has thus initiated the investigation through IATA / PAPGJC on the legality to use the BSP as a vehicle or to charge the fee on the ticket. UFTAA’s view is that neither of the two is within the remit of the current IATA Resolution framework adopted by The Passenger Agency Conferences.

The European agency group (ECTAA) has, within their prerogative, approached the European Commission claiming the initiative to be contrary to EU Regulation No 80/2009 on GDS Code of Conduct. Some associations have also approached their respective Authorities claiming misuse of dominant position whilst some agencies have suggested discontinuation of LH sales.

None of these approaches have until today lead to any change or comments from the instigator Lufthansa Group (LH, SR, SN, OS).

As every airline has the rights to choose its own sales and distribution strategy, IATA and the Authorities will only intervene if the action is found to contradict legal agreements or rules. Each agency has thus to make its own judgment on what action – based on legal and collective knowledge in the market- it takes.

In the event that LH pursue their initiative and accept only direct sales and payment through their own channel, bypassing the GDS’s and BSP, it would consequently mean a reduction in payments to IATA via BSP. There is no reason to pay BSP guarantee for amounts which are not accounted for through the IATA BSP.

Irrespective of whether the LH Group will stick to its guns and steam roll their decision, UFTAA feels that agents should not wait for this possibility to happen but to immediately start contacting their BSP area managers and demand a corresponding decrease in their guarantees to the BSP based on traffic assumed to be redirected.

Whilst it may be very difficult to prove a possible misuse of dominant position, even on individual sectors, it may serve useful for agents’ associations to approach their competition authorities in their respective legislations asking for an opinion on the anti-competitive situation. Such situation arises when passengers buying the same ticket but making the reservation through different sources are deprived from a transparent price comparison; the onus stands on the competition authorities to ensure a transparent, just and fair transaction.