Innovative airlines 2011: #3 Lufthansa

In third place is Lufthansa, which through its acquisition of SWISS, Austrian, British Midland and Brussels Airlines has aggressively led consolidation in the European airline industry. The German flag carrier has also started a new subsidiary in Italy, and is reportedly also interested in SAS and Polish carrier LOT. Serving various market segments with products ranging from low-cost Germanwings to high-end Lufthansa Private Jet, Lufthansa is a strong brand associated with quality, thoroughness and innovation by many travellers, resulting in an above-average share of high-yield premium traffic. However, the airline’s high cost base and decentralized home market makes it vulnerable to competition from low-cost airlines such as airberlin and carriers from the Gulf Region such as Emirates. 

Premium positioning
Lufthansa positions itself at the premium end of the market. In the airline’s words: “Lufthansa sees the key feature of its business in quality. Our philosophy is that, to maintain the leading position, one must be better – better in terms of reliability and innovation. Because good quality binds customers.” Says the airline’s head of marketing and sales Thierry Antinori, ”Over the next five years, we plan to invest one billion Euro to upgrade our products in all classes of service.” 

Business, First, Private
With the introduction of its first A380 in May 2010, Lufthansa has started a complete revamp of all classes across its entire fleet, spending as much as EUR400 million through 2013. The airline’s A380 is the first aircraft to feature Lufthansa’s new First Class, which according to the airline has ”the quietest First Class ever,” with sound-absorbing curtains and carpet and special sound-insulating material in the aircraft’s outer skin blocking noise. Lufthansa has avoided the fully enclosed First Class suites offered by Singapore Airlines and Emirates saying that at numerous in-flight tests and surveys, passengers expressed a clear preference for an open-plan design. 

Business Class on Lufthansa’s A380 flagship has an angled lie-flat seat, which is somewhat surprising as flat beds in Business Class are becoming the industry standard. The airline has attributed its decision to stick with the angled lie-flat concept to the delayed A380 delivery, saying the design was appropriate when the aircraft orders were first made. However, Lufthansa reportedly plans to introduce flat-bed seats on its new B747-8 aircraft from late 2011 on, with other aircraft models to follow in coming years. 

To serve relatively small business destinations in for example oil-regions in a cost-effective way, Lufthansa since 2002 has partnered with PrivatAir, which flies B737-800s with 24 Business Class seats and 84 seats in Economy on behalf of the airline. Since 2005, Lufthansa also offers a Private Jet service, initially in partnership with Netjets. Lufthansa in 2008 took the service in-house, but as the majority of its customers book private jets for point-to-point flights rather than as an extension of their long-haul flight with Lufthansa, the airline is currently in talks with NetJets to outsource its private jet operations again. 

The economic crisis, competition from low-cost operators and the growth of the ‘Gulf Gullivers’ are forcing Lufthansa to become more efficient. Analysts believe that the growth of Emirates, Etihad and Qatar Airways is already putting pressure on fares in important long-haul markets such as India. As a result, there is less money left for airlines to cross-subsidize their short-haul feeder flights which have to become a more profitable stand-alone operation. 

Lufthansa is said to be targeting a 40 percent cost reduction of its European network as part of a cost-cutting program called ‘Climb 2011′. In December 2010, the airline unveiled an EUR170 million ‘new European cabin’ introducing slimmer, lighter seats by Recaro, which will allow it to add up to two extra rows to each plane, while boosting legroom by up to 2 inches. Denser seating as well as a simpler catering offer should help Lufthansa compensate for the loss in ticket revenues as it brings down fares. Passengers in Business Class will continue to enjoy a free middle seat. 

Lufthansa is also cooperating more closely with its low-cost subsidiary Germanwings. Members of Lufthansa’s Miles & More loyalty program now can earn and redeem their miles for flights with Germanwings, and beginning this month (January 2011) passengers can also combine tickets on the two airlines, for example one-way with Lufthansa and return with Germanwings. Meanwhile, an internal debate is reportedly waging at Lufthansa whether it should transfer more routes to Germanwings. 

After a four-year suspension, Lufthansa at the end of November 2010 relaunched its FlyNet inflight Internet service. The service is initially rolled out on aircraft operating select North Atlantic routes (e.g, Frankfurt to New York, Detroit and Atlanta) and is currently available on 12 aircraft with another four to enter service in the next few weeks. In conjunction with the launch of FlyNet, Lufthansa also introduced CloudStream, a tool that allows travellers to create a ‘digital carry-on’ with their favourite content, which they then can browse at their leisure while onboard (more details in this video). It is not clear whether, as an additional benefit for Lufthansa, CloudStream also reduces the consumption of bandwidth onboard. 

Lufthansa operates about 60 lounges around the world and is investing EUR 150 million (untill 2013) to renovate lounge facilities at 22 airports. Besides its flagship First Class Terminal at Frankfurt Airport (passengers are transported to their aircraft in a private limousine), recent lounge innovations include an in-lounge beer garden at Munich Airport and a ‘Welcome Lounge’ in Frankfurt, where a concierge coordinate amenities such as an ironing service while passengers take a shower. Lufthansa in mid-2010 also opened its first ‘Jet Friends’ kids lounge in Frankfurt, which for example features drawing tables sponsored by German pencils and crayons brand Faber-Castell. 

Subway-style boarding
Together with Japan-based ANA, Lufthansa may be the only airline to use so-called ‘Quick Boarding Gates’ which let passengers with electronic tickets board the aircraft without seeing an airline agent. The subway-like machines open automatically after verification of a barcode that is printed out or stored on a mobile phone. If a passenger’s seat has changed at short notice the Quick Boarding Gate prints out a new coupon with the latest details, which passengers can pick up as they pass through. 

Lufthansa is likely to become the first airline in the world to test the use of alternative fuels during commercial flight operations. In April 2011, the airline will begin a 6-month trial with an A321 on scheduled commercial flights between Frankfurt and Hamburg. Pending certification, one of the aircraft’s engines will use a 50-50 mix of biofuel and traditional kerosene. 

Mobile and social media
Lufthansa was the first airline in Europe to partner with geo-social network Foursquare, rewarding Foursquare users who checked in at three Lufthansa venues at the 2010 Munich Oktoberfest with a special Oktoberfest badge as well as a EUR20 flight voucher. 

Lufthansa’s MySkyStatus service lets air travelers share their location during their journeys with their online friends and followers. The application takes a user’s flight information, including departure and arrival data, and matches it to real-time global air traffic data. It then shares via email, Facebook or Twitter regular updates about departure, arrival and  which country they are flying over. 

Lufthansa has also been one of the first airlines to launch innovative mobile applications, such as Lufthansa Navigator, an iPhone app that provides travelers with a navigation system-like map of Frankfurt Airport and MemberScout, a mobile-based social network exclusively for Miles & More members. Lufthansa’s inflight magazine is also available as a free iPad app.


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