British Airways has just announced that as of November 1, 2017, they’ll start charging a fee of 8GBP for bookings made through many third parties, including major travel agencies. Airlines incur significant fees for bookings made through many distribution channels, and historically they’ve covered the cost of those fees.
As a technicality (not that this means anything to 99.99% of us), this fee is being levied for systems that don’t use an NDC (New Distribution Capacity) led connection. British Airways’ website, sales offices, call centers, and many self-booking tools through partner travel agencies, will be exempt from this fee.
In 2015 Lufthansa tried something similar, as they imposed a 16EUR fee for tickets booked through third parties. Their argument was that their base fares have decreased significantly, so proportionally the costs incurred through these systems increased massively.
What British Airways is doing here is pretty risky. British Airways tickets will be more expensive than competitors when booked through third parties, meaning that British Airways won’t seem as competitive in many cases, and they could lose quite a bit of business as a result. At the same time, the upside is that they’re hoping more people will book directly with them, and they’ll also be saving a lot of money.
Long term this is likely the direction the industry is headed. Over the years we’ve seen travel agent commissions on most airfare cut significantly, as airlines no longer view this as a necessary cost, at least for most discounted fares. Similarly, airlines are starting to feel like they shouldn’t be “subsidizing” those booking through third parties. This is ultimately a marketing and distribution expense, but if enough airlines implement these kinds of policies, the savings for airlines can potentially be huge. It’s just that no one wants to be the first one to make the change.
So while this is risky, this is the inevitable direction the industry is headed, and I don’t necessarily think that’s a bad thing. Distribution costs are high, and that can largely be avoided by booking directly with the airline. I’d rather airlines invest money in things other than just paying distribution costs.
(Tip of the hat to View from the Wing)
With this weekend's IT meltdown, perhaps British Airways will see fit to add a new "IT services disaster recovery fee" to all tickets.
I'm surprised Lucky hasn't covered the meltdown affecting BA today. Usually he's like s*** off a stick reporting the slightest of niggles with BA....
One good reason to book through an OTA/3rd party is when you use a corp card to book and the pax will not have the card with them for check-in. BA.com explicitly asks if the pax is the card owner (i.e. who is paying for this ticket). We will not risk our pax being denied boarding (again) because they don't carry the corp card used to pay for the tickets (which has happened to us in the past leaving from LHR with a UK issued card!!!).
Perhaps it's worth adding that IAG is planning to roll out an NDC compatible booking platform this year, which is of course also excempt. So if a travel agency is using this platform, they will be able to avoid the charge.
Bottom line it looks like they want to speed up the transition to new IT systems - which is not a bad idea especially when considering the shortcomings of Resiberia, the legacy system IB uses.
They will definitely loose competition. It was right they cover the cost as the the traffic from third parties result in more traffic for them.
Most employers require work related travel to be booked through a TA for a number of reasons including keep track of where the employees are to respond to emergencies. I don't think corporate customers would be too happy with the change. Perhaps it won't impact them if their TA uses NBC.
Haven't some hotel chains been doing this as well? I use Accor a lot and through their site I get 10% off, and points. Book through Expedia or some such and I get neither.
Any idea if this would affect the Ultimate Rewards portal to book with points, since they have a partnership with BA?
I hate their fuel surcharges...business tickets are like 4K but they add that stupid 1K fuel charge tax...
If BA wants to do this, then they should get rid of their B.S. "fuel surcharges"
Buying directly from the airline is not always the cheapest or smartest. A good travel agent can provide competitive fares and options unavailable when buying direct. More importantly, in the case of IROPS those booking through an agent aren't the ones standing in line or waiting on hold for hours. Full disclosure I am an agent.
Just another reason not to fly BA.. That Spaniard trying to run BA like a low cost carrier... It ain't Spirit Airlines dude!
The surcharge probably only applies to tickets issued on BA 125 stock. Tickets booked via the AA site are issued on 001 stock and anyway surcharge free (at least if they implement the fee the same way as LH group does).
It's now already the case that when booking via a 3th party exactly the same TATL flights are +- 16€ cheaper under UA code than under LH group code.
What I'm worried about with this is if American Airlines counts as a 3rd party site.
It's not that risky anymore for them, LH (+partners SN, OS and LX) charge the 16€ YR DCC already for 1,5 year.
Would expect that IB will follow quickly, and If only AF/KL follows too every big airline in Europe will have such a non direct booking surcharge.
Also some smaller airlines are a little bit cheaper on their own website than in a GDS (often the difference is filled under a YR tax code)
So while this is risky, this is the inevitable direction the industry is headed, and I don’t necessarily think that’s a bad thing.
I have to disagree with you there. I think TA's & OTA's will always be around as a lot people are still completely useless at booking their own travel.
I think the vast majority of people who visit this site are airline savvy and know rules and change fees etc, but most...
So while this is risky, this is the inevitable direction the industry is headed, and I don’t necessarily think that’s a bad thing.
I have to disagree with you there. I think TA's & OTA's will always be around as a lot people are still completely useless at booking their own travel.
I think the vast majority of people who visit this site are airline savvy and know rules and change fees etc, but most people travelling don't know much.
Did Lufthansa not drop the fee after putting it in ?
@Donna A couple of months ago I booked an IB J ticket via Expedia from MAD-CCS. I was looking at specific dates and for some reason IB website didn't display this fare (even when calling their incompetent call center, they told me there were no tickets). For these same dates, Expedia showed availability. I took the inbound flight last week and had no problems in either leg. Maybe it was an exception rather than the norm.
Why do Americans care about this? There is a general dislike of BA on this site and when you do advocate using BA it is only when there is a fare sale (only ever available in the US) probably stackable with the AARP deal anyway. I think you can live an £8 surcharge in those circumstances.
Is there any good reason to use an OTA? I'm no fan of BA and wouldn't book with them under any circumstances, directly or indirectly, but I agree in principle that other airlines should follow suit.
If booking thru BA:s website always would be the cheapest way, the problem would not exist...