Lufthansa’s DCC: Directing a new era of distribution

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Back in September 2015, Lufthansa added a 16 Euro surcharge (DCC) on every ticket for Lufthansa, Austrian Airlines, Brussels Airlines and Swiss International Airlines that is not booked through the official websites of the carriers, via an airline service center or at an airport ticket desk. This sparked a huge amount of controversy in the in the industry. Patrick F. Poetzsch, Head of Automated Sales, Product and Programs, shares his thoughts on Lufthansa’s move at Aviation Festival Asia 2016

According to Patrick, the percentage of revenue generated from the sale of flight tickets by their airlines has continuously decreased while other service and system partners in the value chain were recording increasing margins and returns. Lufthansa wanted to counteract this trend by refocusing their commercial strategy.

The DCC has been implemented to gain more distribution freedom. Lufthansa is now able to offer services on a more flexible and modular basis, with individualized price options and ancillary services. Offering advanced and, at the same time, substantially cheaper additional booking options that also allow them to better present their products to the customers is in their best interest.

The airlines of the Lufthansa Group have been particularly active devising solutions together with key technology partners that will enable them to develop and offer new “direct connect” booking channels. Parallel to this, the airlines are working on providing booking platforms for key-account corporate clients which will give them and their corporate travel agencies direct access to the air travel products of the Lufthansa Group.

At present, airlines are not yet able to market their services via all sales channels, as it is common in other industries. The contracts and structures have previously prevented any deregulation in many areas. Lufthansa wanted to change this with their new commercial strategy and take advantage of greater degrees of freedom in their sales activities, providing customers with the tailor-made services that they are looking for and wherever they are looking for them. 

Do you think this marks a new paradigm in the relationship between airlines and distribution partners? This issue and more will be addressed at Aviation Festival Asia 2017 next February in Singapore.

 

photo credit: LIAM J McMANUS

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