Continued innovation

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For 55 years the Lufthansa Group has connected South Africa with the rest of the world, and Southern Africa remains a strategic focus for the group. But Lufthansa is also committed to the continual improvement of the airline industry, which is why the group is investing $560 million into innovation within all aspects of air travel over the next few years. Dr André Schulz, Lufthansa General Manager for Southern Africa, took some time to offer more insight into the group.

Q: What’s the current percentage split between business and leisure travel on Lufthansa between Germany and South Africa?

A: There is a healthy mix of business and leisure travellers.

Q: Can you point to specific industries that are using this route for business travel?

A: German companies with significant investments into South African operations are utilising the flights into Johannesburg and Cape Town. Sectors that are easily identifiable include IT & telecommunications, automotive, manufacturing, mining, professional services, and financial services.

Q: It’s been a couple of years now since the Lufthansa Group implemented a surcharge on all GDS bookings. What impact have you seen?

A: Despite some controversial discussions at the initial stages of the Direct Connect announcement, we have not experienced a negative commercial impact, either globally or in South Africa. Given our long-standing partnerships with all major TMCs in South Africa, we are in constructive discussions with them to develop closer co-operation by establishing Direct Connect partnerships as TMCs understand the urgency for change and the need to invest in new technology.

Q: Are you surprised that other airlines haven’t followed suit?

A: We don’t measure the success of our distribution strategy on followers. Direct Connect is the core of the Lufthansa Group’s future distribution strategy. Saving the €16 GDS charge by using Direct Connect is just one short-term benefit for the TMC. The major long-term benefit will be content differentiation, meaning specific sales promos or discounted ancillary products will be displayed with preference via the Direct Connect distribution channel. There is no doubt that this trend will be further adopted within the travel industry. It’s only a matter of time.

Q: It’s been about six months since the launch of your non-stop service between Frankfurt and Cape Town. What has the response been?

A: We have seen an overwhelming demand for the new year-round service and advanced bookings exceed our expectation, which is why we have decided to extend this service from three to five weekly flights as of October. We recognise that Cape Town requires long-term and dedicated investment. Hence, we will introduce the Eurowings brand, a Lufthansa Group’s low-cost fully owned subsidiary, to South Africa with a new seasonal service between Cologne and Cape Town from November.

Q: How is Lufthansa using Virtual Reality to enhance the travel experience?

A: Our global sales teams have 300 VR goggles in total to show off our products to the customers. In interactive 360-degree videos the benefits of our new business class or premium economy class can be experienced. On top of that, this year at the ITB show in Berlin, Lufthansa introduced a 360-degree Virtual Reality moving map, or a ‘glass-bottom’ plane. A VR headset enables passengers to follow the route flown in 3D and find out more about cities along the way.

Q: In what other ways is Lufthansa making 2017 the ‘Year of Digitalisation’?

A: The Lufthansa Innovation Hub hosted the first digital aviation forum in January. Demonstrating a number of in-house digital innovations, Lufthansa unveiled 29 different projects to the public, such as the new Facebook Messenger chatbot ‘Mildred’, where our customers can ask about the best prices for flights and proceed with their booking on LH.com.

Q: Do you have any news on your fleet?

A: As part of a group-wide investment of around $2 billion in new aircrafts, the Lufthansa Group is set to receive a further six Airbus 350s this year. In addition to 14 Bombardier C Series jets and two Boeing 777-300ERs for SWISS, Lufthansa being the Airbus 320neo launch customer, will receive a total of 14 A320ceos and A320neos in 2017.

Q: What about onboard product? Any new developments in this space, particularly as it relates to business travel?

A: Lufthansa has implemented a ‘Business Class Signature Service’ across most of our long-haul network. With a dedicated flight attendant, the aim is to provide a service that reminds passengers of being in a top restaurant. In addition, Lufthansa has established the premium economy class on all long-haul aircrafts offering a high-quality seat with greater comfort and up to 50% more room. Austrian Airlines has also introduced premium economy on all long-haul flights starting in 2018. Lufthansa FlyNet now also offers passengers on our European short and medium-haul flights a seamless wi-fi experience.

Q: What’s your view on the state of the global airline industry and what strikes you as the most pressing issue or talking point?

A: The global airline industry is changing day by day. Low-cost-carriers have opened up the convenience of air travel to large numbers of people, putting pressure on yields in short-haul and recently also in long-haul markets. As a reaction to global competition and continuous yield declines, premium full-service carriers need to implement strict cost management measures and explore new ancillary revenue streams. Given this pressure, we will most likely see further consolidation in which alliances, partnerships and joint ventures will become more important than ever before.