Future thinking

Lufthansa delegates gathered in the German city of Frankfurt last month to discuss the latest company developments.
ANALYSIS
CEO WOLFGANG MAYRHUBER: Confident the airline will thrive.
CEO WOLFGANG MAYRHUBER: Confident the airline will thrive.

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Lufthansa delegates gathered in the German city of Frankfurt last month to discuss the latest company developments.

Following the successful launch of its first class terminal, business and private jets, Lufthansa airline has gone from strength to strength. With its strong emphasis on quality, Wolfgang Mayrhuber, CEO of Lufthansa, is confident the German airline will continue to thrive.

"Quality has to do with the people who come to the company as well as the brand," Mayrhuber says. "We have a quality based company and a service based team which is likely to attract new people to the company."

According to management, all of the company's successful product launches were carefully researched. Thierry Antonori, vice president of sales and marketing says: "We take lots of time to analyse the opinion of our customers before we start something new because we do not believe, particularly for the premium class products, that you can just buy an existing product and put your logo on it."

At present, the airline is working on the new first class service, which will be launched in September 2009. More than 2000 existing premium passengers have helped develop the new product through interviews, workshops, reviews and test centres.

We've built four of these seats for test runs in the Airbus A340, flying every day between Frankfurt and the US. We have had very positive feedback from customers and we will use that to sort out any small problems before the launch," Antonori explains.

The new service will coincide with the delivery of the first A380, which will be arriving from the aircraft manufacturer two years late. On the subject of the delays, Lufthansa's CEO remains unconcerned. "Although we always wish for on-time performance, we are not too worried about the late arrivals," Mayrhuber says.

"The media are reporting the delays, but really a one or two year delay on a plane as complicated as the A380 is not really that important. But what they fail to report are the 10 year runway delays which are causing major problems in the aviation industry," he adds.

The destinations of the new A380s have yet to be decided, though according to Joachim Schneider, Dubai is one of the possibilities. The new aircraft can accommodate up to 853 passengers, though Lufthansa will be seating approximately 500.

"The A380 was never meant to be stuffed with economy class, it was always meant to be a three class aircraft," Schneider explains. Along with the new first class seating Lufthansa will be launching an improved economy section. "We have more standardisation in economy class," Antonori says.

But nevertheless we'll be introducing a new generation of seats, a new entertainment system and improved lighting, all of which we'll get with the new A380s."

In addition to providing comfortable aircraft, the airline is also keen to cut down its carbon footprint. "We work together with manufacturers; we want efficient aircraft which are as environmentally friendly as possible," says Nico Buchholz, senior vice president of the corporate fleet.

According to the CEO, Lufthansa has made a great deal of progress in this area. "You have to be very ecologically minded these days," Mayrhuber says. "We need to know how much energy a plane will use and how many kilometres it will fly. It's important we ask these kinds of questions about the aircraft."

By 2020, the airline aims to have reduced its carbon footprint by 25% per kilometre flown compared to 2006. In addition Lufthansa wants to reduce harmful nitrous oxide emissions, reduce aircraft noise and promote alternative fuels.

The company's management hopes that by modernising its fleet and introducing ‘green technology' to its aircraft, they will better be able to achieve these goals.
 

The rising cost of fuel was another topic at the forefront of conference discussions. While Mayrhuber warns that Lufthansa would be introducing a kerosene surcharge, he also points out that fuel prices will impact all areas of life, not just aviation.

"We all have to live with the increasing costs. It will affect everything including household necessities like central heating," he adds.

Mayrhuber is also keen to assure customers that costs will be reduced if fuel prices drop. Despite concerns that travellers will stop buying tickets when prices rise, Lufthansa's management remains positive. "The travel industry is still very attractive and well marketed," explains Mayrhuber.

 

Antonori believes that by maintaining a high quality product, Lufthansa will be able to weather this particular storm and continue to grow. "There are two billion people travelling today and we think that number is set to double in the next 15 years. You have to differentiate with the quality of your product and that's what Lufthansa aims to do," he adds.

One way the airline hopes to do this is by establishing an excellent premium class service. According to Antonori the private and business class jets are already testament to this.

Launched in 2006, the company's private jet service is designed to cater for premium customers looking for flexible air travel. With no other scheduled airline in the world offering its own private jet service, the airline considers this unique product one of its best.

"We began the project two years ago with a partner but last year we decided to buy our own fleet to operate the jet. The first of nine jets, a Cessna Citation C3J, started on July 1 and other planes will be introduced in September and October," Antonori says.

To ensure customers' discretion the new aircraft will not display the company's logo. "We've done a lot of market research in the area and found customers don't want the planes to be branded, they want to remain inconspicuous," Antonori adds. Private jet passengers are offered a variety of luxury amenities including an a la carte dinner service and limousine transfers from the airport.

We believe the private jet sector will grow over proportionately and we believe that there is less distinction between the customer of the private segment and traditional first class customers," he adds. Currently all the company's jets are quite small but in 2009, the airline plans to introduce larger aircraft.

In addition to the private jet, Lufthansa has launched the business jet, which has recently begun flying an Airbus A319 daily between Dubai and Munich. The aircraft has 48 seats onboard, to allow for quick boarding and de-boarding as well as reduced airport waits.

The reclining sleeper seats allow passengers to rest during the journey while the personal DVD players enable customers to select their own choice of entertainment.

Antonori believes the premium class services Lufthansa offer are some of the best. "We have invested a lot in our premier class. We buy 8.1 tonnes of caviar a year which makes our company the world's biggest purchaser. We also buy 181,000 litres of champagne per year." Specially trained chefs design menus for the airline, with dishes tailored to individual destinations.

Lufthansa hopes to be the first airline to reintroduce live broadband on its flights. The idea was first launched in 2003, but since then the service has been discontinued. "We provided internet with broadband but our partner disrupted the service and it means today no airline is in a position to use this service," Antonori explains.

At Lufthansa we are working with a consortium of partners on this project and we are quite optimistic to be the first airline to reintroduce live internet broadband." The technology, which will be offered to first, business and economy class passengers, should be up and running later this year.

On the subject of onboard mobile phone technology, management has made it clear the airline is strongly opposed. "We have decided not to introduce cell phones because we think people will be quite resistant. We really want to respect customers' privacy," Antonori concludes.

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