Lufthansa and Amadeus reset their distribution relationship
The two European heavyweights now say they agree on the future of airline ticket retail. Don’t expect pay-per-view to take off right away.
Airline group Lufthansa and Amadeus have signed a new retail agreement that includes so-called new distribution capacity content for the first time.
From the fourth quarter, travel agencies using Amadeus no longer need to use third-party technology providers, or Lufthansa’s own platform, to offer fares – which are generally cheaper than those available on global distribution systems – to their customers.
It’s part of a broader air movement to increase their share of direct bookings, but in this case it particularly affects business travel agencies, which make three out of four of those bookings from new distribution capacity.
The agreement includes Lufthansa as well as Austrian Airlines, Brussels Airlines, Swiss, Air Dolomiti and Eurowings. Airfares will be available on Amadeus Selling Platform Connect, Amadeus Travel API and Cytric Travel & Expense.
Similar agreements will also be finalized with Travelport and Saber during the quarter, according to Skift. But it’s a first between the two companies and “a bridge between the old and the new,” Decius Valmorbida, president of Travel at Amadeus, told Skift.
“It’s unique for Amadeus,” he said. “The most important thing is that we can offer an end-to-end solution. … allowing the full price range that Luftahnsa has is important.”
When it comes to pricing, travel retailers that don’t connect directly to airlines or other specialized technology platforms may miss out. Qantas recently made this point by limiting its lowest fares to new distribution capacity only.
Tamur Goudarzi Pour, chief commercial officer and board member of Swiss, said he could not comment specifically on other airlines, but said: “The common interest of the major players…is that it gives us a impulse. We all have an interest in speeding up. I welcome all who are progressing. It’s a landmark, it’s bigger than anything I’ve seen on NDC.
This technology also allows continuous or dynamic pricing. This is said to increase revenue for airlines and agencies, as they can offer more prices, exclusively through agencies that book with the new distribution capacity. “There were workarounds,” Valmorbida said, “but not reacting to the millisecond speeds that new modern digital times demand.”
The continuous pricing model will likely extend to long-haul travel next year.
“Both heavyweights are in agreement,” added Goudarzi Pour. “It’s quite important. The new distribution capacity effort isn’t a dead horse, it’s alive and well.
Pay during the flight
What is not so alive is the idea that one day travelers will simply pay for their flight when they board or disembark their plane. Airplanes are not yet ready to turn into hotels.
Goudarzi Pour said that while this was a landmark deal, it had nothing to do with a paid travel model, which was politically motivated.
“We think changing the cash flow logic doesn’t help the industry. If you put more tickets in that last-moment tranche, it would make it more expensive,” he said. a political will that we strongly oppose.”
However, what is important is that Lufthansa now has fast refund procedures, where 85% of its tickets are refunded instantly.
Amadeus’ Valmorbida seems to agree. “In the end, the jury is always the same: the traveler. If they find it convenient to pay during the flight, if that’s where the market is heading, then more airlines offer that choice. On the other hand, this flexibility usually comes with some constraints in terms of availability or predictability whether or not you can fly – will the business traveler be able to adapt or not? ” he said.
He pointed out that on popular routes, inter-destination shuttles have been around for some time. The difficulty with the pay-as-you-go scenario is that airlines have to manage crews, airport agreements, network planning.
Certainly, after the pandemic, this process has improved, he added.
“To penetrate a market or a road, it would take years. The pandemic has changed that. As the traffic was not predictable, this delay was increased to three months. But as always, the traveler is king. With the end of the pandemic, we will see exactly where this new balance will be.