CWT ponders charges in latest twist in airline distribution play

Carlson Wagonlit Travel says it is considering levying charges going forward to mitigate the cost of having to book fares via new methods introduced by airlines.

In a carefully worded statement, the travel management company says it “may need to implement new/different types of charges” and refers to “material non value added costs” being incurred by having to book via “independent fare links or other inefficient means”.

It seems like bizarre twist in the ongoing airline cost of distribution discussion for a number of reasons.

While, CWT says it will make no further comment at this time, the move seems like an admission that the surcharge imposed by Lufthansa almost two years ago is having an impact.

In the immediate aftermath of the introduction of the charge, a confidential report leaked to Tnooz suggested the airline had taken a hit.

Lufthansa said at the time that the €16 Distribution Cost Charge was being levied on all GDS bookings which were described as “several times higher” than other booking channels.

More recently, British Airways has announced that it and sister airline Iberia will begin levying an £8 fee on all fares not booked via an NDC-led connection.

The charge will come into effect in November.

According to a statement from CWT at the time of the BA announcement, the company supports the objectives of NDC to improve transparency.

However, it goes on to describe changes to distribution as “not productive” where they “reduce comparison shopping, impose content fragmentation, drive technical and operational inefficiency, and shift distribution costs to the highest yielding channel and customer base.”

The move also seems slightly left field as it is widely believed that the majority of TMCs already pass on these charges to corporate customers as it is considered a significant sum.

Simon McLean, chairman of Click Travel says that prior to its recent introduction of direct connect technology, it had always pushed the charge on to customers.

“There’s no margin to absorb it.”

In April, Click Travel announced it was one of the first UK TMCs to make an NDC-enabled direct connect solution available.

McLean adds:

“This is why we’re investing in the direct connect technology. We saw this coming years ago.”

One possible explanation is that some TMCs may have other marketing agreements with airlines which could lead to them absorbing the costs.

Tnooz has asked CWT to confirm whether it has been absorbing the cost up to this point.

Travel agency groups have recently written to the European Commission asking it to tackle “dangerous developments” in airline distribution.

The full CWT statement on the potential charges follows:

“Given recent industry announcements regarding NDC and airline distribution, we are in active dialogue with multiple parties surrounding all sides of this issue.  

We remain focused on harnessing technology to improve user experience and provide transparency – with a view to delivering best-in-class service and value to our clients, partners, and other stakeholders.

Distribution dynamics or decisions by other parties that require us to access or book content via independent fare links or other inefficient means drive material non value added costs.

Accordingly, in order to continue to holistically meet the needs of our clients and partners, we may need to implement new/different types of charges in these types of circumstances.”

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