Lufthansa Expands Pay As You Fly Program

<B> Lufthansa Expands Pay As You Fly Program</B>

By David Meyer

<I>Torremolinos, Spain</I> - Lufthansa has expanded its Pay As You Fly program to include more than a dozen additional corporate clients within Germany. Last month it also added eight destinations outside of Germany for use by Siemens Corp., the original pilot and user of the program since 1997.

Lufthansa's general manager of key corporate account management Christoph Wilhelm told corporate travel managers gathered for the Association of Corporate Travel Executives' Global Conference here last month that there probably will be 20 German corporations using the ticketless travel program by the end of this year. Next year, he said, the airline will offer Pay As You Fly to those other companies on the routes it currently serves outside of Germany--including Amsterdam, Brussels, London, Paris, Strasbourg and Vienna--as well as add more of the 53 international destinations to which it offers electronic ticketing to the program in the coming year.

Meanwhile, informed sources said Siemens is the unnamed client that Continental Airlines intends to work with in piloting its version of the program in the United States in the coming year (<I>BTN</I>, Sept 6), and that the test will begin in the first quarter of next year.

Wilhelm said Lufthansa intends to share its Pay As You Fly experience with its Star Alliance partners starting sometime next year, but the airline is concentrating first on helping them develop electronic ticketing, the platform on which Pay As You Fly is built.

Wilhelm said he also expected to offer the international routes to other companies in the program next year. Lufthansa also plans to work out the technical details so that those companies would be able to use the Pay As You Fly program inbound from those destinations by the end of next year.

Wilhelm acknowledged that Pay As You Fly creates some exposure to the airline regarding no shows, but said that the number of no shows so far was relatively small. He also conceded that the program, through which travelers are charged for tickets only when they pick up their boarding passes, eliminates the float that corporations traditionally have paid between booking and billing reconciliation following the flight. He said these disadvantages were outweighed not only by a reduction in processing costs--including the bypass of the bank settlement plan by posting charges directly to the Siemens corporate card or the airline's lodge card--but even more importantly by developing a direct sales relationship that virtually locked in customer loyalty.

Wilhelm estimated that Lufthansa has invested more than $1 million and reaped