Lufthansa introduces new pricing system

Lufthansa wants to introduce additional price levels. Critics warn that it is now becoming confusing.

According to Lufthansa, the new price levels should not make flights more expensive for customers; on the contrary, they should still benefit from the price points.

DAs yesterday’s prices do not quantify today’s costs, airline ticket buyers have become used to that. Deutsche Lufthansa is now taking the next step and wants to introduce even more price levels for its core brand and the subsidiaries Austrian Airlines and Swiss, which are called between the sale of the first and the last ticket. This is called “continuous pricing” in the group and roughly speaking means that ticket prices are almost permanently in motion.

“So far we have been working with 26 booking classes, if one is booked out, the next takes effect. For the passenger, the price difference on a long-haul flight can be up to 100 euros, ”says a company spokesman, describing the old order. He explains the new one as follows: “In 2019 we will add more price levels, the price jump may then initially be below 10 euros.” And the spokesman praised: “This does not make flying more expensive for our customers, on the contrary, they benefit from the new price points . “At the expense of the consolidated balance sheet, the change that ticket prices rise in smaller steps should not go either. “The introduction of the changed price system is not at the expense of our ticket revenues, because we will be able to better control the utilization of our aircraft in the future,” says the spokesman. Flights that are poorly booked are slowly increasing in price, whereas those that are in high demand are increasing at ever shorter intervals. How many price levels there will be and how short the intervals will be remains open.

The fact that a reorganization of the price system was imminent came to the public through a conversation published on Thursday between the travel magazine “FVW” and the head of sales at the Swiss subsidiary, Markus Binkert. They want “more dynamic pricing,” said Binkert, who is also responsible for revenue management in the group, there. Critics fear that “more dynamism” is a paraphrase for more opaqueness, that it is increasingly difficult for customers to compare prices of competing companies – especially when they are looking for the cheapest connection at several points in time.

Effort and costs for travel agencies are increasing

As proof of the new complexity, travel sellers see the fact that Lufthansa does not want to offer the new price levels everywhere. Not every travel agency and not every flight portal on the Internet will show them, but other agencies and the Lufthansa website will always show them. “The price points are only set on certain sales channels – where it is technically possible. They can only be offered by partners who have a direct connection to our systems, ”confirms the group. According to Lufthansa, there are 2000 such partners, including portals, corporate travel agencies and travel agencies. “But we also offer small travel agencies a technical opportunity to join,” they say.

The German Travel Association (DRV) is not appeased by this, especially since the additional connection to Lufthansa would be associated with effort and costs for the offices. Travel agencies, business travel service providers and online portals come across the fact that Lufthansa repeatedly appears as a pioneer for changes in ticket sales and that other airlines regularly follow suit. “With the announcement that it will introduce so-called continuous pricing and offer it exclusively via Lufthansa direct sales channels, Lufthansa is taking another step away from external sales,” says travel agency owner Otto Schweisgut, who is also chairman of the DRV flight committee.

Low-cost airlines such as Ryanair, however, grew for most of their existence without any connection to travel agencies and online portals. However, the sales outlets see the new Lufthansa price system in a series of steps taken by the group and other airlines to want to attract ticket sales. At the beginning there was the so-called zero commission for the mere brokerage of a ticket. Online portals make do with offering rental cars and travel insurance for flights, which they earn through brokering. In 2015 Lufthansa introduced a 16 euro surcharge for sales via central booking systems that travel agencies and portals use. British Airways and Air France did this. In the spring, Lufthansa took its cheapest tickets from these booking systems, which left travel agencies feeling cut off from competitive prices. “At the same time, with the increasing dynamics of prices, transparency in competition continues to decline. That can neither be in the interests of sales nor in the interests of the end customers, ”says Schweisgut.