Q&A: Lufthansa – A focus on innovation

South Africa is a primary growth market for the Lufthansa Group, but perhaps more importantly, the airline group has a greater focus on innovation, as it looks to leverage this into all areas of the business. General Manager for Lufthansa Southern Africa, Dr Andre Schulz joined Business Traveller for a Q&A session to expand on this focus area.

Q: What are your views on the current state of the African airline industry?

A: The African market still presents an opportunity for growth, both for international and local businesses. The prevailing global economic conditions have forced a long-term change in this perspective, especially in some of Africa’s major markets, which continue to face challenges. This period will certainly see change, as airlines continually evaluate the profitability of routes, and adjust growth strategies more frequently to mitigate these risks. However, taking a long-term view presents a case for airlines to establish a solid base from which to grow. This includes the establishment of increased routes and the upgrading of the product to meet both inbound and outbound demand.

Q: What are your thoughts on the concept of an ‘open skies’ policy in Africa?

A: The Lufthansa Group welcomes any kind of liberalisation of traffic rights. The Open Sky agreement is important for African airlines wishing to advance intracontinental connections.

Q: Have you made any recent changes to your fleet?

A: Lufthansa will be introducing the A350-900 to its Munich- Cape Town route, starting this month. Last year, Lufthansa placed orders for a total of 25 of these jets. Currently, seven of these are already operating out of Munich. The aircraft can seat 293 passengers: 48 in business, 21 in premium economy, and 224 in economy.

Q: Where does technology fit into the Lufthansa strategy?

A: The Lufthansa Group will invest a total of €500 million in innovations by 2020 to further improve its products and services. Innovation is to be anchored in the corporate culture in a sustainable and group-wide manner. All business units have set innovation targets, created a central Innovation Unit within the Group Strategy Department and established an innovation fund to support projects across the group. In addition, Lufthansa is building a bridge to the digital start-up world with the Lufthansa Innovation Hub in Berlin. With the Innovator Award, an internal award for outstanding innovation projects, Lufthansa aims to sensitise employees to trends and innovations within the group, support the development of new ideas and concepts and promote a group-wide innovation culture.

Q: What, do you believe, do you have to get right to keep the business traveller happy and loyal?

A: The airline industry is undergoing a major transformation; new technologies are fundamentally changing our customers’ expectations, which is essentially to anticipate their needs and address them appropriately. In the course of the ongoing digitalisation process, we are working to personalise communication with the customer along the entire customer journey as much as possible. Lufthansa has set itself the goal of meeting or exceeding changing customer needs with personalised communication, sales and service solutions, creating sustainable added value for customers within the next 3 to 5 years.

Q: What are your thoughts on the global oil price and its impact on the airline industry?

A: Globally, the airline industry has continued to experience the increased consolidation of airlines, which has associated review implications on routes, frequencies, aircraft types, and reward programmes, as well as airline group alliances. For airlines, the increased competitive environment has meant that greater attention on customer centricity and personalisation of air travel. This has led to long-term airlines investment into digitalisation, developing alterative distribution models and revenue streams. The nature of the airline industry’s service provider relationships is being redefined by technology, driven primarily through IATA’s New Distribution Capabilities (NDC). Traditional distribution models are changing to enable airlines, via travel management companies, to offer a wider selection of content and personalisation to the end traveller.

Q: What’s your view on the low-cost long-haul space, taking your Eurowings learnings into account?

A: Eurowings is the fastest growing European airline, and is planning for further growth in the long-haul segment. Based on our positive low-cost long-haul experience, as well as taking into account the feedback from our customers, we intend to grow the long-haul offerings from Munich and Düsseldorf, primarily to leisure markets. The business model allows for the extension of routes to new markets, as well as attracting new price-sensitive customers.

Q: What can customers expect from Lufthansa in 2019?

A: Travel personalisation, enhanced partner technology and a modern fleet. Lufthansa will continue to focus on developing state-of-the-art technology and modernise the distribution landscape worldwide, with a particular focus on the further deployment of our new distribution strategy in Africa.