THE GTMC COLUMN PAUL WAIT
Paul Wait is chief executive of the Guild of Travel Management Companies (
gtmc.org)
THE ACTE COLUMN CAROLINE ALLEN
KNOW WHO YOUR FRIENDS ARE
INDUSTRY TRUST IS BEING ERODED BY THE ONGOING GDS FEE ISSUE
distribution community. It’s just like any personal relationship – once the trust has gone, it’s almost impossible to recover. There are probably a million reasons why Lufthansa
F
introduced a global distribution system (GDS) fee. The most obvious – and no doubt highly pressing – is the need to cut costs, and quickly. However, in times of crisis, we all know we need our friends around us. For Lufthansa to reward those who have supported it with no consultation, no understanding and no warning of a major commercial shift is bad business sense. There has been a very public backlash against the airline, both by those in the business and leisure travel arenas. The battering to its reputation doesn’t appear to be of concern to Lufthansa. Not immediately anyway. That’s the problem with this whole situation: Lufthansa has put short-term gains ahead of everything – even common sense. Undervaluing the role of third-party distribution is not a good long-term strategy. The apparent solution, to offer travel management companies (TMCs) access to direct fares at its own website, lacks a basic understanding of the professional travel management sector. The lack of usability of the site means that very few TMCs will ever use this booking channel. The GTMC’s member community has been pretty vocal in its favour of working with airlines that offer mutually beneficial terms. Simple collaboration is all it takes to build decent long-term business relationships.
The public statements of other airlines to express that they will not follow Lufthansa’s GDS fee model shows how seriously the aviation sector takes this issue. Watching Lufthansa sever its relationships with those who delivered sales must be painful. No professional business wants to see bad behaviour tarnish its sector.
The good news for those airlines prepared to take a stance against a GDS levy is that this is cementing relationships with the TMC sector. These stronger partnerships will breed the kind of success that Lufthansa won’t be able to achieve alone.
BUYINGBUSINESSTRAVEL.COM
raught business relationships never lead to success. That’s why business travel professionals are baffled at the behaviour of Lufthansa, which has actively caused tension and distrust within the third-party
Caroline Allen is the regional director of the Association of Corporate Travel Executives (
acte.org)
LET’S TALK ABOUT DISTRIBUTION
NEW CHALLENGES SHOULD ALWAYS BE ADDRESSED WITH SERIOUS DISCUSSION
W
e don’t have to look back far to see how much our industry has shifted. A little over 20 years ago, business travel was handled locally by a business travel unit above the holiday shop,
and package holidays were commonplace. Few people had internet access or mobile phones but used fax. Then businesses nationalised, regionalised and globalised their purchasing to benefit from economies of scale and business travel agents started to morph into travel management companies. TMCs earned more than 9 per cent for every ticket sold and benefitted from back-door overrides to increase revenues. Leisure fares were impractical for business travellers because of the minimum stay and advance purchase requirements. The arrival of zero agency commissions led to the
reinvention of the financial relationship between TMC and buyer, and procurement took ownership of corporate travel decision-making. Travel policies were professionalised and controls tightened to drive cost down. Today, access to a wealth of information is almost instant
through unprecedented leaps in technological advancement through web and mobile proliferation. Algorithms used by super-fast processors enable us to buy differently through multiple channels and devices. World events and the speed that information is shared through social networks make risk management a priority for many. The corporate travel manager’s role is far more sophisticated and multi-faceted, requiring multiple feeds of data and a more consultative approach to support their company’s core operation. Therefore, a challenge to the distribution model is not a surprise but an inevitability in the evolution cycle of the business travel industry. ACTE’s global webinar on September 1 encouraged discussion on the practical issues and solutions relating to Lufthansa’s GDS fee charge, and remains available for download. There will also be a mainstage discussion on distribution at ACTE’s global conference on October 14-16 in Paris. Conference registrations are tracking well ahead of expectations as this issue goes to press but will be capped at 700. With airline CEO speakers already announced and more being confirmed, thought-provoking discussion is guaranteed. Join us and unleash your imagination to rethink your business travel strategy. Don’t miss out!
BBT SEPTEMBER/OCTOBER 2015 127
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