BA and Iberia plan third-party booking surcharge, Amadeus shares fell
The move will be a blow to global distribution systems (GDS) providers such as Amadeus IT Group (AMA.MC), Travelport (TVPT.N) and Sabre (SABR.O), the share prices of which all fell on Friday. Amadeus and Travelport both dropped 4 per
Lufthansa caused a stir in the industry when it introduced its own GDS surcharge in 2015 and CEO Carsten Spohr has repeatedly said he expects rival carriers to follow suit.
"From what we hear in the industry, and with the visible success of Lufthansa, I'd be very surprised if others would not follow," he said in March.
Airlines often have a tense relationship with GDS providers, which typically achieve much higher profit
British Airways and Iberia said that,
"We will continue to work with the GDS providers to distribute our content to valued agency partners via existing solutions. However, these systems and their traditional technology solutions currently carry significantly greater costs to
Previous attempts to break away from the system cost airlines market share, prompting a return to the GDS providers, but new technology means airlines can now offer corporate customers similar booking tools themselves.
IAG Chief Executive Willie Walsh said this month that talks with Amadeus were ongoing, adding that the existing relationship between airlines and GDS providers was unsustainable.
"We're prepared to take some short-term pain to get some long-term structural change in that relationship," he said after the group reported first-quarter results.
Amadeus said it believed that a surcharge was not in the best interest of travellers and that indirect distribution remained cost-efficient.
"We continue to be engaged with IAG to find a sustainable, long-term agreement that suits all parties," a spokesman said in a statement.
BA and Iberia said the surcharge would not apply if the GDS used content created using NDC technology that gives airlines greater control of how fares and products are displayed. Amadeus said it was working to find a deal to integrate such content.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.