BREAKING: Air France-KLM to Introduce GDS Surcharge

For those naysayers who said the Lufthansa GDS surcharge wouldn’t stick, guess again. Not only is Lufthansa’s surcharge still in place, but British Airways and Iberia followed through on their announcement and implemented their surcharge on Wednesday.

And now, Air France-KLM has announced that they too will add a “Distribution Surcharge” on all GDS bookings starting April 1, 2018 “in order to adapt to market circumstances and to further improve its efficiency”.

The announcement was made on a conference call Air France-KLM held with analysts today whereby the airline group said that it aims to cut its unit costs by 1-1.5 per cent this year.

“GDS are a key component of Air France-KLM distribution. However their model represents higher costs than other options do and comes with more constraints.” read a Third Quarter 2017 Results presentation downloaded from their website. “The Distribution surcharge covers the cost difference created by the GDS model in compared [sic] with corresponding costs of Air France-KLM direct sales.”

The surcharge of €11 one-way (Approximately $16 CA) will apply on all third-party GDS systems including Amadeus, Sabre, and Travelport. The surcharge does not apply to travel agency sales made via an NDC connection and to Air France and KLM direct sales channels.

A press release from the airline group outlining their third quarter results stated that Air France KLM is embracing NDC (New Distribution Capability, an enriched IATA messaging standard that enables the distribution of rich content and personalized offers), and further investing in options for travel partners to access, book and sell it.

In other Air France-KLM news, India’s The Economic Times is reporting that the airline group is close to forming a far reaching, deep commercial joint venture (JV) with India’s Jet Airways.

The JV, which would likely entail synergies on more routes, their respective frequent flyer programmes, cargo and engineering, said Pieter Elbers, KLM’s CEO, in an interview with the Economic Times.

The JV will also consider "metal neutrality", a concept whereby any of the airline partners’ aircraft could be operating the route. No timeline was given for implementing the JV.

Jet Airways already has interline and codeshare agreements with Air France-KLM and their SkyTeam partner, Delta Airlines, however, is not a member of SkyTeam at this time.

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