Business Travel News - September 14, 2009 - (Page 18)

EuroBTN Corp. Buyers Try To Combat New KLM Agency Card Fee By Amon Cohen Leading Dutch travel buyers say they intend to negotiate back extra costs they will incur as a result of a new KLM credit charge fee of ?7.50 for bookings made through travel agents. KLM, which brought in the charge last month for its most restricted ticket types, defended its decision to EuroBTN by saying airlines should not have to subsidize a payment method that primarily benefits travel agents and their customers. In common with several other European carriers, the Dutch flag-carrier introduced card fees for direct bookings via its Web site in September 2006. However, it has waited until now to introduce a similar fee for agency bookings because it could not find a method to make the charge through global distribution systems. Travel management companies in the Netherlands have said they will pass on the E7.50 charge to customers. Herman Mensink, chairman of Cortas, a grouping of the Netherlands’ largest travel buyers, said his members do not intend to end up out of pocket as a result of the new charge. “KLM has every right to impose charges for credit cards, so we will accept that, but this was formerly part of the ticket price,” said Mensink. “We will take it into contract negotiations because we will have to pay for the charges. Some of our members have already spoken to KLM about this and the initial indication is that the airline won’t consider it, but there are many levers in a contract negotiation.” Mensink said his members would almost certainly continue to pay by card because they depend on the method for management information. However, Mario Kriebel, vice president of credit card programs for BCD Travel, is concerned businesses will switch to settlement through invoicing. Netherlands, explained that card merchant fees cost the airline as much as 2 percent of the settled value of a ticket. He also questioned the extent to which corporate clients would be affected by the move. “The use of leisure-designed airfares is limited among corporate customers, though the amount is growing in these current economic times,” said Blom. The KLM sales chief added that it was unreasonable for airlines to carry the financial burden of the benefits clients receive from using cards. “Business-oriented travel agents and corporate accounts are encouraged to use credit cards, based on services such as cash flow control, credit terms, management information, automated data feed, insurance and kickbacks,” Blom said. “Currently, these services are solely financed out of the merchant fee. In other words, KLM as the merchant is financing the added-value services of the credit card companies towards the corporations and agents. This unbalanced distribution between costs and added-value services is the driver for levying a credit card surcharge for the lower-yielding tickets.” There have been growing expectations in the global corporate travel industry that airlines will start to offload merchant fees, but efforts so far have been less than successful. United Airlines has temporarily suspended its attempt to withdraw assumption of the merchant fee burden for certain agents in the Unites States (BTNonline, July 20). Earlier in the decade, litigation from American Express ended British Airways’ refusal to assume the merchant fee for all but Universal Air Transport Plan cards (BTNonline, April 6, 2004). However, Kriebel expects KLM to be successful because its move does not discriminate between agents or card issuers. Kriebel believes KLM will ignore protests from clients and that its introduction of a charge could prove highly influential. “It is comparable with the Preferred Fares Program in Germany,” said Kriebel, referring to a Lufthansa program that effectively charges E4.70 for every GDS booking. “Corporate clients screamed about it but Lufthansa still did it. This is not the end. Other airlines are watching KLM. We have had a clear signal from one very big carrier that the merchant fee topic is on its agenda.” ■ Herman Mensink “Our first feedback from customers is that they will stay with cards, but in the long term we expect some will stop using them once they see how large an amount they are paying in fees over a month or two,” he said. Kriebel is urging clients to continue using cards to pay for KLM flights because doing so streamlines administrative processes and contributes to rebate incentives with issuers. Welmer Blom, vice president of sales and service for KLM in the The news items on this page originally appeared in EuroBTN, the new weekly newsletter that features the latest European business travel news, research, analysis and interviews, brought to your inbox by the editors of Business Travel News. To sign up for EuroBTN, please visit btnonline.com/newsletter. Lufthansa Signs JetBlue Codeshare Deal, Adds Austrian By Jay Boehmer Lufthansa and New York-based JetBlue Airways this month announced that they have signed a codeshare agreement that will connect the German airline’s international network to 12 JetBlue destinations, including gateways in Boston and New York. Meanwhile, Lufthansa also completed its takeover of Austrian Airlines, which officially will become part of the Lufthansa Group this month, the carrier said. Lufthansa and JetBlue filed a request with the U.S. Department of Transportation on Sept. 1. Once authorized, the carriers will launch the codeshare on 12 JetBlue U.S. destinations and 180 European, Middle Eastern, African and Asian destinations served by Lufthansa. The carriers expect codeshare flights to be available for sale through both carriers’ Web sites and travel agencies “on or about Oct. 8,” the carriers noted in a request with DOT. “JetBlue respectfully asks that the department award the requested authority promptly to facilitate marketing and advance sales of these new codeshare service,” the carriers’ request said. The codeshare agreement is the next step in the evolving relationship between the two carriers, which Business Travel News began in late 2007 when Lufthansa agreed to take a 19 percent stake in the U.S.-based airline. Since then, the carriers have suggested evolving the relationship from a purely financial one to include more strategic components. Meanwhile, After striking a deal with the Austrian government in December 2008 to gain a nearly 42 percent stake in Austrian Airlines, Lufthansa received European Commission approval and fulfilled all other requirements for the transaction’s close. Once outstanding bids are complete this month, Lufthansa will hold a 90 percent stake in Austrian. ■ 18 Monday, September 14, 2009 www.BTNonline.com http://www.btnonline.com/newsletter http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - September 14, 2009

Business Travel News - September 14, 2009
Contents
Inside Track
Profiles In Travel Management
Forum
Aviation
Lodging
Travel Management
EuroBTN

Business Travel News - September 14, 2009