Lufthansa Group has established its first two global distribution system-bypass connections to travel management companies. Both Clarity and
Click Travel are based in the U.K. and have histories of establishing direct
connections to travel suppliers.
Lufthansa’s application programming interfaces, which conform to the
International Air Transport Association’s New Distribution Capability
standards and were developed with Farelogix, started to pipe content to
those TMCs on May 1, following development work initiated in September 2016.
The announcement is striking because the first TMCs to connect are
based outside any of the airline group’s home markets and because two
midsize players are the first to reach agreements with Lufthansa.
In spite of long-term industry consolidation, the U.K. has retained a
healthy, independently minded and tech-savvy midmarket TMC sector.
However, Andreas Koster, senior sales director for the U.K., Ireland and
Iceland for Lufthansa Group, said, “We are in discussions with all of [the
multinational TMCs]” and “with HRG we are in a concrete project.”
Pat McDonagh CEO of Clarity, which was until recently known as Port-
mant Clarity, is pleased to be ahead of them. “We move a lot quicker than
multinational TMCs, which gives us a competitive advantage,” he said.
Click Travel executive chairman Simon McLean added: “Most TMCs
have their hands tied because they are limited by their relationship with
their technology provider. If you have built your business around a GDS,
you have to wait for them to move.”
Both Clarity and Click Travel offer their own online booking tools that
mirror their agent desktop systems. In both cases, agents and custom-
ers will see Lufthansa direct fares displayed on the same page as GDS
fares from other carriers. “We already aggregate different sources in the
flight search, including Multicom and Travelfusion,” said McDonagh,
referring to a couple of aggregators.
Click Travel considered displaying both GDS and direct content from
Lufthansa but concluded there was no advantage in including the former,
since the latter offers the same and then some. “What you see on the page
is night and day in terms of quality,” said McLean. “You are getting that
parity with airline websites.”
A better customer experience is one of three reasons McLean identi-
fied for making the switch. The others are improved ability to amend and
manage bookings—a point on which McDonagh disagreed—and access
to wider content.
Koster repeatedly heralded the ability to offer exclusive promotions
and customized fare bundles via the new channels “in the near future”
but did not specify when the differentiated content would become reality.
The GDS-bypass connections offer another advantage in avoiding
Lufthansa’s €16 Distribution Cost Charge for GDS bookings. Yet, McDonagh echoed another Lufthansa direct connect pioneer, Siemens VP
Nevertheless, the move away from GDS distribution raises profound
questions about the future economics of corporate travel distribution,
given that GDS providers pay substantial incentives to TMC customers.
Fewer GDS bookings mean less GDS revenue for TMCs. Does that mean
they in turn will raise fees for corporate customers?
Both McDonagh and McLean rejected this idea for two reasons, one
technological and one commercial. The first, said McDonagh, is that TMCs
can still take out more costs through further automation. “TMCs in general
need to become more efficient. They are too reliant on manual processes.”
Additionally, noted McDonagh: “Lufthansa is doing this to sell an-
cillary products and naturally that comes with a reward to the TMC,
Two U.K. TMCs Go Direct
so maybe one revenue will be
replaced with another revenue.”
McLean added, “The revenue
streams have to change.”
Koster took the view that “this
will only work if we create new
content, not just move existing
content from one channel to an-
other.” McLean added that his
team has been “toying with” the
idea of offering sponsored listings
on its fare displays in the manner
of a Google search page.
Another specter raised by di-
rect connections and the retreat
from the universality of GDSs is
increased complexity, both for
TMCs and their corporate clients.
For Koster, this represents a com-
mercial opportunity. “It will be a
unique selling point of a TMC in
future to manage this complex-
ity on behalf of the customer,”
he said. McDonagh and McLean
expressed confidence they could
handle the fragmentation of distri-
bution, the latter saying, “It’s not
However, the extent to which
simplification will be abetted by
the intended standardization of
API connections through NDC is a
moot point. McLean estimated that
using an NDC adapter only saves
20 percent of the work needed for
each new airline API adopted by
Nevertheless, Click Travel is actively pursuing more APIs. “We
have another airline following
shortly and various others in the
pipeline,” said McLean. Similarly,
in October 2016, just days before announcing its merger with
Clarity Travel, Portman Travel
told BTN it was looking closely
at British Airways’ NDC offering.
BA parent International Airlines
Group, meanwhile, indicated
during an earnings call on May 5
that it plans to reformulate how it
participates in GDSs.
As for Lufthansa’s next steps,
other agencies are evaluating and
implementing API-based distribution. “Lufthansa key account
managers are evolving more and
more into distribution consultants,” noted Koster. Lufthansa
has certified two online booking
through Amadeus-owned passenger services system Altea,
and Germany’s Onesto via Farelogix—and is “in the planning
phase” with a few more direct
corporate clients, following connections to Siemens and Volkswagen in 2016.
Three Reasons Click Travel
Connected Directly to Lufthansa
Executive chairman Simon
• A better customer
• Improved ability to
amend and manage
• Access to wider
“This will only
work if we create
new content, not
just move existing
one channel to