Amex GBT Goes After ‘Higher Processing Costs’ Of Gol, Ryanair, Southwest, Others

By | October 11, 2016

American Express Global Business Travel in an August letter indicated customers would pay a $10 surcharge on transactions booked with airlines deemed “high cost.”

“This additional $10 fee applies to any transaction booked with a supplier that is booked outside a GDS; does not settle its accounts through industry-standard methods; has limited or no participation in industry-standard fare filing processes; or is designated as basic booking, low cost, specific or other similar designation,” according to an Aug. 8 letter addressed to clients and obtained by The Company Dime.

Included among these suppliers are Aeromar, Dragonair, Frontier Airlines, Eurowings, Gol, Grand China Air, Regional Express, Indigo Airlines, Jetstar Airways, Ryanair, Southwest, SpiceJet, Spirit Airlines, Volaris and Vueling.

Amex GBT surchargeAsked to confirm the letter’s authenticity, officials provided the “sample” list above and this written statement: “The travel industry has standardized certain processes to ensure transparency and efficiency; however, some airlines have opted out. At GBT, we aim to provide our customers with the greatest range of data to facilitate travel bookings, as well as efficient processes to create the right itinerary for their travel needs. By not participating in industry standards, airlines create higher processing costs that must be absorbed by other parts of the travel booking chain. As a result, GBT is looking at alternatives to manage the increased costs resulting from these bookings.”

According to the travel management company’s letter, “Over the last several years, high-cost supplier bookings have seen double-digit growth while the overall business remains flat to down. Historically, travel agencies have absorbed these additional costs; however, as the number of high-cost bookings grow[s] these costs continue to rise, making it unsustainable.”

The press officials declined to say whether the program took effect on Sept. 1, as planned according to the letter.

While some of the listed airlines are available in global distribution systems, they may use the “basic booking” option and pay the GDSs lower segment fees than larger network carriers. This, in turn, may mean lower incentives paid to TMCs like GBT.

Apparently absent from the list are full-service carriers in the Lufthansa Group. Those airlines in September 2015 began charging a fee on GDS bookings, which GBT opposed. The airline company’s fee applies to the fare it charges, so the cost already is borne by clients. Lufthansa low-cost subsidiary Eurowings, though, is listed by GBT. Eurowings reportedly is not part of Lufthansa Group’s GDS fee program.

This would not be the first time a TMC considered a standardized fee program covering suppliers deemed more expensive to access. Carlson Wagonlit Travel in 2011 threatened to enact one after American Airlines created its Direct Connect program. CWT’s CEO at the time was Doug Anderson. He joined Amex GBT as CEO shortly after the August letter was dated.

Also an executive with CWT in 2011, Andrew Winterton is now on the board of Certares. Certares leads an investor group that owns half of American Express GBT. The other half is owned by American Express Company, some of whose cardholders now receive quintuple bonus points when they book directly with airlines.

Media personnel with Frontier, Southwest and Spirit did not immediately respond to questions.

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