Pioneering a new airline distribution program has its perks. The Lufthansa direct-connect initiative with Siemens will benefit the conglomerate’s travelers even when they don’t book that way. More than eight months into the program, Siemens officials last week briefed The Company Dime on progress and lessons learned.
It was always part of the plan to provide extras to Siemens travelers who use Amadeus Cytric to book without a global distribution system in Lufthansa Group internal reservations systems. Along the lines of corporate recognition programs, this started with access to Lufthansa Group lounges irrespective of status or booking class. Beginning this June, all Germany-based Siemens employees will get lounge access regardless of how they book.
Access is granted when Siemens travelers show a QR code that was emailed to them. Siemens VP for global mobility services Thorsten Eicke said Lufthansa worked out a way to provide the benefit using the traveler’s corporate email address. “I expect it will run smoothly but it’s still new ground,” said Eicke.
Siemens head of global airline procurement Susanne Steinmann said the airline company would prefer to provide such benefits “only in a direct-connect environment,” but acknowledged that this sort of collaboration has additional benefits in negotiations. “We get further advantages on price,” she added.
Steinmann estimated that by the second half of this year, Siemens travelers would enjoy early boarding on flights within Germany. This perk would be indicated on boarding passes and also in a QR code.
“For travelers, lounge access is No. 1 and priority boarding No. 2,” said Eicke. “We had underestimated priority boarding from a traveler point of view.”
He said other carriers are interested in working with Siemens this way. Talks are most advanced with a Middle East-based airline. Others in Asia or Europe may be next. “We see interest from United, but the Americas carriers at the moment are more passive,” he said. “They’re happy with the GDS environment.”
There are both risks and benefits when blazing trails, but Eicke said the Lufthansa arrangement “is working more robustly than we thought it would, and with less noise than we thought.”
Lufthansa pilots posed a challenge when they struck the airline in November. Eicke called it a painful but useful test:
“The TMC is in place as caretaker and in this situation, their involvement increased by 40 percent to quite a peak. On average, we have a number below 18 percent in terms of involvement of the TMC. So 80 percent-plus are really touchless. We’re using since November the Amadeus Ticket Changer. This is allowing us to make cancellations and rebooking also for the direct-connect bookings online by the travelers. This was or is the main part of requests coming to an agent or caretaker. We expect that going forward, this will go below 10 percent. So for those remaining, we need of course a high quality, high-touch concierge-type service where people get a really great experience.”
Carlson Wagonlit Travel in March announced it won a bid for Siemens’ European operations outside of Germany. About half of the 32 countries had been using BCD Travel, which supports the direct-connect initiative as the designated agency in Germany. Direct connect was one of the topics in the European tender process, said Steinmann. Siemens plans by 2020 to consolidate to one TMC provider globally from three.
According to Eicke, “it’s not about ticketing, reconciliation or credit card handling. It’s really about where they can bring service in. I’m even willing to maybe pay a premium for a nice concierge-type experience.”
While the bookings aren’t flowing through the GDS in the direct-connect environment, payment and ticketing processes are unchanged.
“We do ticketing on BCD’s IATA number,” said Eicke. “It’s the traditional way to do the core payment process.” Using the IATA Billing and Settlement Plan “is close to their current workflow,” he said, but did require the partners to establish “bridge” for data reporting.
Other payment solutions could come into play, but that’s not part of the immediate focus, said Steinmann.
Meanwhile, as Siemens moves to Concur Expense, officials are considering how to bring the direct-connect approach into an end-to-end framework.