GBT’s Non-GDS Charge Makes Sense

Shopping Cart IconBuyers have a new distribution dilemma.

American Express GBT is phasing in a $10 surcharge for handling airline tickets from carriers who don’t use common industry channels for sales and settlement. (More coverage herehere and here.)

Think of this as the opposite of the €16 surcharge that Lufthansa Group is applying to tickets purchased via the traditional GDS/TMC channel. One happens if you buy in the GDS, the other happens if your LCC airline doesn’t play there.

Both of these surcharges annoy buyers. “What – you’re going to charge me more based on where I buy a ticket, or who I buy it from – that’s outrageous!”

In fact, it makes perfect sense.  Lufthansa and GBT make the same point – their costs to process a purchase vary by channel.  They both have found a way to allocate these costs to buyers, nay, the travelers, who use the higher-cost channel.

The benefit to buyers of these new surcharges are real, just less obvious. Those buyers who prefer the lower-cost channel will save some money…but those savings come with offsetting costs.

GBT makes a good argument about the extra costs it incurs when handling a non-GDS, non-ARC/BSP airline ticket.  While most buyers don’t appreciate how much more work that is, they should admit there is some, and so it’s a fair question of how to allocate those costs.

In turn, this should force buyers to recognize the extra value they get whenever they buy in the higher-cost channel.  For Lufthansa customers, this means using the GDS/TMC channel to provide comparison shopping, interline ticketing and immediate data capture, for a cost of 16 euros.

For buyers using low-cost carriers, you can have GBT  book, track and handle those LCC tickets for $10.

It’s like having to drive 15 minutes out of your way to get lower prices at a Walmart…the sticker prices are lower, but you have to spend extra time and fuel to get ’em. Maybe you should just order the same thing from Amazon and pay a $10 delivery fee…

As a free-market fan, I’m in favor of offering these choices to buyers, rather than spreading the costs over all customers.  It just seems fair.

The big question is whether other TMCs will follow GBT’s lead.  In all fairness, I think they should.  At the same $10 price?  That’s another good question best left to a free market.

This entry was posted in Airlines, Distribution, Travel Management. Bookmark the permalink.

4 Responses to GBT’s Non-GDS Charge Makes Sense

  1. Jean Sloan says:

    Hi,

    I would like to respond to your comments below. As a buyer I am not happy with the additional expense for a few reasons as it applies to a major non-GDS airline:

    · Currently pay additional fees for “direct connect”

    · Currently pay higher agent direct and agent assist booking fee which cover any LLC or non GDS booking?
    Unless there has been an increase in transaction processing fees either from the LLC or non- GDS airlines, shouldn’t technology off-set any operational increases?

    Just my thought…

    Jean
    Jean Sloan | [cid:image001.gif@01C9C41A.2C2A1900] Global Travel Manager | •+ 408.879.2712

    • Scott Gillespie says:

      Jean, my read on the new fee is that it will replace the two charges you are incurring now, so it’s not on top of those. Perhaps someone from GBT could clarify this, as your point is well taken.

      • Hello Scott – We are happy to clarify this point. The high cost booking charge will replace, and not be incremental to, any OBT supplier direct fees, and other non-GDS fees related to these bookings. This charge is being implemented to help GBT start to partially recover the incremental cost to process these bookings.

  2. As always Scott, a well thought out argument. Makes perfect sense to me. It’s all about the value equation isn’t it. Not what, at first look, appears the cheapest. Benefit minus Cost = Value. Simples.

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