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Q&A to support CWT / IAG announcement

16 October 2017

 

What has happened?

Earlier this year, International Airlines Group (IAG), parent company of British Airways and Iberia, announced it would add a US$10 ‘distribution technology charge’ (also called GDS surcharge) on each airline fare component booked with these 2 carriers, effective 1 November 2017.

 

A fare component is typically each segment of a ticket. A round-trip ticket of NYC-LON-NYC; would equate to two fare components of NYC-LON and LON-NYC, thus incurring a technology charge of $20.

 

CWT has reached an agreement with IAG to avoid the technology charge on bookings made through global distribution systems that have reached an agreement with IAG, which will be referred to as participating GDS platforms.

 

Are travelers exempt from the surcharge regardless of the GDS being used to book travel?

No. At this time, only bookings made through participating GDS platforms are exempt from the surcharge being imposed by IAG. IAG is in discussions with the other GDS’ to find a solution, and CWT is closely monitoring the situation.

 

Is there any impact on Meetings & Events bookings?

Bookings made via the participating GDS platforms are exempt while other GDS platforms would incur the GDS surcharge being imposed by IAG.

 

Is the technology surcharge applicable for all IAG operating carriers?

No.  The surcharge being imposed by IAG is applicable on all flights marketed and operated on British Airways and Iberia codes, including flights marketed with a BA or IB code that is operated by other airlines. No technology charge applies on GDS marketed and operated bookings made on other IAG owned carriers.

 

Is the technology surcharge applicable on code share partners?

The technology charge does not apply on flights operated by British Airways or Iberia that are marketed  by other carriers such as American Airlines, which has an extensive codeshare arrangement with both carriers.

 

Are there any impacts to traveler benefits by booking the AA code share?

Benefits available based on current frequent traveler level with British Airways are also offered when booking codeshare flights. More details

 

For bookings that incur a surcharge, how will it be applied?  

The charge is collected by British Airways / Iberia as part of the total fare calculation. The surcharge will be identified on the ticket by utilizing a Q charge.

More detail explanation on how British Airways will apply the charge

 

Is the British Airways / Iberia distribution charge refundable?

The refund rules for the GDS surcharge will align with the fare rules of the fare.  If the fare purchased is refundable, the GDS surcharge will also be refundable.

 

Can you assure clients will have access to all BA and IB fares and content?

The content delivered through participating GDS platforms will be at the same level our customers are accustomed to seeing at this time. CWT is dedicated to ensure our clients have the content they need.

 

What if IAG does not come to an agreement with the other GDS?

There are options available to our clients if IAG and the other GDS’ do not reach an agreement, such as codeshare arrangements with a BA or IB code that is operated by other airlines.

 

Can I move to the participating GDS?

Changing GDS’ is not a simple solution. There are implications that impact downstream systems, which can impact the overall customer experience. Depending upon the market, some GDS’ do not have a significant presence which impacts support, content and integrations that we have developed. CWT has built a significant infrastructure to support the various GDS’ we use around the world to satisfy client needs including policy enforcement, analytic reporting, invoicing & settlement and duty of care.

 

What is CWT doing to help me avoid the surcharge?

CWT has reached an agreement with IAG to avoid the surcharge on bookings via participating GDS’ and will continue to work to find a comprehensive solution for all GDS’ and markets. Our agreement with IAG is structured so that this solution can apply to other GDS’ and markets as soon as they reach an agreement with IAG.

 

I’ve heard that making a booking via a direct connect can avoid the surcharge – how do I do that?

If CWT is required to do so, this would be technically and operationally similar to how we access, book and service certain low cost carriers (LCCs) that are not in the GDS today. However, means for doing this include non-standard, manual processes, developed by CWT – which are more labor-intensive, create additional cost and complexity, and provide what we see as a degraded customer experience.

 
There is no content distribution alternative which offers the depth and breadth of the GDS that will allow us to provide the value and efficiency we do for our clients and our airline partners today. Accordingly, we may need to implement a fee, paid by the customer, to offset the time and costs of booking a fare outside the GDS.

 

Does the booking tool I use impact the surcharge?

No. The booking tool does not impact the surcharge being imposed by IAG. The underlying GDS being used determines whether a technology surcharge applies.  If required to access/book IAG content outside of the GDS for a booking via an online booking tool, we may need to charge an incremental fee to the client to cover our increased operating cost, similar to an offline booking.

 

Does CWT think other airlines will begin to charge for booking via the GDS?

We can’t speculate on what other airlines will do. At this time, no other airline has indicated any plans publicly to follow Lufthansa Group and IAG. Should that change, we will inform you as soon as possible.

 

What agreement is in place between CWT and IAG regarding NDC development?

CWT and IAG have agreed to work together on developing plans to offer NDC-level content to our mutual customers.

 

Isn't the GDS an "old" distribution model and aren’t there better, more modern alternatives?

The GDS continue to be a robust marketplace that provides a comprehensive shopping experience where individuals are able to shop and compare across multiple suppliers. This shopping experience allows customers to know they have access to the best content without having to shop in multiple locations.

 

The GDS’ are investing in their technology to use NDC content which will support many of the initiatives the airlines are looking to do around personalization and merchandising. However, both sides, airlines and GDS’, need to collaborate commercially and technically to enhance and develop the technology required to make NDC a reality, and responsibility lies with both parties. We are working hard to bring these parties to the table with us to find common ground to solve this.

 

We believe that a unilateral decision by a carrier to drive volume outside the GDS to their direct channels will likely bring the following detrimental impacts:

  • Fragmentation of content that creates complex and manual searching and booking
  • Decreased price competition through less comprehensive comparison shopping
  • Limitation on CWT’s ability to assist with, and smoothly manage, travel changes
  • Significant reduction in CWT’s ability to effectively support traveler during emergencies and safety and security situations
  • Disjointed data provision for reporting and traveler tracking
  • Potential traveler confusion and inconvenience

 

We believe that these, and other impacts will ultimately result in diminished services and additional costs for your travel program. We further believe that there is no direct connect solution in the marketplace which addresses these impacts in an efficient manner. 

 

The GDS’ are well positioned to solve technically for NDC in cooperation with the airlines without disrupting existing services, process efficiencies or impacting the safety and security of travelers.