When you have a product, you must get it to the customer, when you have a service, you must also get it to the customer; these are one of the foundations of business that simply must be understood in order to be successful.  

This is because the cost to sell a product or service must be factored into the end price to the customer. Who do you think pays for all those advertisements?  We do.

How you execute that process of getting products and services to your customers is the magical question.  As consumers we then make our choices based on a host of factors, so that we either purchase your product or service or say no thanks.

Airline seats are no different.  There is a cost to distribute them - and this cost must be factored into the overall cost of the product.  Southwest Airlines has engaged direct selling - and has forgone the usual GDS selling channel.  Stihl power tools has engaged local small dealers and hardware stores to sell their products, electing not to use big box stores.  

Apple sells through a variety of sales channels, but maintains price equality through all the channels.  Apple makes more selling direct than they do selling via a Walmart or Target, but to us the price is always the same.

With the announcement of Lufthansa charging a fee to book via a GDS channel, they have angered many.  But what if they rather gave a discount to book direct?  What if they said we will give everyone that books via their website a credit at the time of booking?  Or what if they just raised their rates so that they made less when someone booked via a GDS but a little more when a client booked via their own website (kind of like Apple)?

I do not know what percentage of their bookings are via a GDS, but I have been told by some in the airline industry the percentage is well over half.  So what they have elected to do is to upset over 50% of their customers in the process.  

I understand they want to better control how they sell their product - and offer additional services and additional revenue opportunities, but do you think they could have done it a little more tactfully?

Alas, us Germans can be a little gruff and not very polished after all.

Bradley Seitz
Brad has over forty years of diversified business experience, most recently the past twenty years in corporate travel management. In his current role as Owner, President and CEO for Topaz International, he has the unique role of being able to assess both the corporate side and the supplier side of the business travel industry as an independent third party. He began his corporate travel career at Xerox Corporation in the Corporate Travel Department, and served in global client and operation roles at Carlson Wagonlit Travel and Rosenbluth International.

www.etopaz.com