Amadeus makes German agents new offer

Talks with Lufthansa continue 

Amadeus has offered its German agents €3.40 per sector for all fares booked in the country under Lufthansa's controversial preferred fares programme (PFP).

The offer, made in a letter to agents, will come into force on January 1, 2010 if a deal between the two sides is not signed by then.

Talks between the two sides have been going on for more nearly two years without any agreement.

A spokesman for Amadeus, in which Lufthansa has an 11.5% stake, said the "intensive" talks were still continuing.

Lufthansa and its wholly owned subsidiary announced their PFP in early 2008 and it came into force in Germany and Austria on July 1, 2008 and in Switzerland on October 1.

Under the scheme, the two airlines raised their fares by €15 one way or €30 return on tickets bought in any of the three countries.

But the carriers have continued to make available the previous lower fares.

They are called "preferred fares" and are the subject to a surcharge if booked through a GDS.

Lufthansa charges agencies €4.90 plus VAT per coupon and SWISS charges CHF8 (€5) per booking.

Lufthansa/SWISS have signed agreements with other GDS, notably Sabre and Travelport GDS which owns Galileo and Worldspan, exempts their agents from the surcharge.

But they have failed to reach an agreement with Amadeus far the dominant GDS in the three countries.

In the absence of an agreement, Amadeus absorbed the charges for its agents in Germany and Austria until January 31, 2009 and to March 31, 12009 in Switzerland.

But when agents were left to pay the fee themselves, Amadeus suffered a massive loss of business in Germany within weeks

It said in early April that it had lost 10% of flight bookings since the end of January.

Holger Taubmann, the company's general manager in Germany, said that if this trend continued, Amadeus share of the German market would drop from 83% in January to 20% in 12 months.

Such a loss would not make the company a viable business model in Germany.

He said the 10% loss had already pushed its share down from 83% to 73%.

Speaking of the possible 20% drop, Mr Taubmann said: "That would be what happens if we remain as we are today.

"That is why we are doing our utmost to find a solution which is a viable economic model for the future."

A spokesman for Amadeus said today (October 8) the letter to agents said the intensive negotiations were continuing and progress was being made.

But he said that the IT company recognised that agencies needed to plan their business fro 2010 so it was making the €3.40 offer to help them.

He said agents had reacted positively and with appreciation to the offer.

The PFP which was announced without consultation with the GDSs has been opposed by travel organisations, including the VDR, the German travel managers' association, and the Business Travel Coalition.

www.lufthansa.com   www.amadeus.com   www.businesstravelcoalition.com   www.vdr-service.de