A new YUL route, Continuous Pricing & more for Lufthansa Group
Heike Birlenbach, Senior Vice President Sales, Lufthansa HUB Airlines, and Hans DeHaan, Senior Director Canada of Lufthansa Group

A new YUL route, Continuous Pricing & more for Lufthansa Group

TORONTO — The Lufthansa Group (LHG) is many things – an airline group, an aviation company, and a “human-centric” global corporation. What it’s not? An Uber in the sky.

Delivering far more than simple A to B travel experiences, LHG – whose main hub airlines include Lufthansa, SWISS and Austrian Airlines – is investing heavily into modernizing its fleets, expanding its networks, and digitizing its platforms, all of which are being done in response to customer needs, said Heike Birlenbach, Senior Vice President Sales, Lufthansa HUB Airlines.

“Our customers’ expectations are changing and we need to make sure that we’re not a one-size-fits-all,” she said in a media briefing in Toronto yesterday. “We need to be able to respond to their needs, and this means relying on and investing in technology. To some it’s a buzz word, but to us we see it as a real opportunity to cater to our customers.”

Coming off its best year in history in 2017, Birlenbach said 2018 is also looking good for LHG, which just released its Q3 results. It generated total revenues of EUR 26.9 billion in the first nine months, an increase of 6% over the prior year, with traffic revenues also up 7%. In October alone, the Group welcomed around 13.2 million passengers, an increase of 9% compared to the previous year’s month.

And with more digital capabilities on the horizon, plus a new Montreal-Vienna route coming in spring 2019, LHG’s presence among both travellers and travel partners – particularly in Canada – is only set to increase in the coming years.

Here are some highlights:

NEW ROUTES & ROUTE UPDATES

Beginning April 29, 2019, Austrian Airlines will introduce year-round flight service between Montreal and Vienna on Boeing 767 aircraft. Service will occur daily throughout the summer schedule and five times per week during the winter season.

With this new route, Austrian’s existing Toronto-Vienna service will be taken over by Star Alliance partner airline Air Canada, also starting on April 29, 2019, year-round, daily, nonstop, onboard its Boeing 787-9 Dreamliner. These flights will operate five times weekly during the winter, and daily throughout the summer. The flight connection between Vienna and Toronto will also be bookable as a codeshare flight via Austrian Airlines.

JOINT VENTURE

Through its joint venture with United and Air Canada, the Lufthansa Group enjoys close to 30% marketshare in the North Atlantic (Canada and the U.S.), which represents the largest group capacity for transatlantic. The Toronto-Vienna route, which will be taken over by Air Canada, is “a perfect example of how well we work with Air Canada,” said Hans DeHaan, Senior Director Canada of Lufthansa Group.

Birlenbach added that LHG is now entering a new stage of the joint venture, “where we’ll have even stronger ties to each other.” Next steps involves making sure that “we have seamless customer experiences between the airlines.”

In the North Atlantic, LHG offers 352 weekly flights in 23 destinations, three of which are in Canada (Toronto, Montreal and Vancouver). These three are connected to five main hubs – Vienna, Zurich, Frankfurt, Munich and Brussels, and from there, everywhere beyond.

TECHNOLOGY

According to Birlenbach, Lufthansa took a rather disruptive approach a couple years ago when it first launched NDC (New Distribution Capability) initiatives. As one of the first airlines to adopt the IATA-backed program, Lufthansa now has 2,000 agencies connected via NDC channels, which allow them to sell all the airline’s products.

Encouraging all travel agencies to “walk with us into the future,” Birlenbach added that Lufthansa is also working on expanding its own web offerings. “Thirty percent of our tickets are managed through our platforms,” she noted.

LHG has launched an NDC microsite – lhgroupairlines.com/ndc – that highlights all the ways the Group supports agencies on the technical side. It also works with Farelogix (for larger agencies), and SPRK (for smaller agencies), a free web-based booking platform.

“All this is a sign that we really want to take the trade along on our journey and make sure they understand why we’re moving in this direction,” said Birlenbach.

Other digital initiatives include AirlineCheckins.com, an automated check-in assistant that checks in travellers for flights on more than 200 different airlines, and a Facebook Messenger service (still in its Beta version) that allows travellers to rebook tickets directly from the app.

CONTINUOUS PRICING

In development right now for LHG’s hub airlines is Continuous Pricing, which Birlenbach said was created in response to increased competition and ever-changing dynamics in the marketplace. With all of the world’s airlines currently working on a pricing structure based on the 26 letters of the alphabet, which serve as ‘steps’ so to speak, LHG is opting for a more dynamic logic that offers infinite steps, with in-between price points.

“With the current pricing structure, if one price isn’t available anymore, then the next level comes up and it might be a difference of, say 100 euros or Canadian dollars,” she said. “But with Continuous Pricing, every agency or corporation that’s connected to us directly will be able to get all those price points in between. This will really benefit the customer since it’s usually the lower price available before getting to the next level.”

Adding that Continuous Pricing will be sellable in the marketplace, Birlenbach believes that once it’s established, agencies will call for a direct connect solution.

Continuous Pricing is already available in Germany for partner agencies, and will be launched internationally in 2019.

INNOVATION

LHG has spent approximately 500 million euros throughout the years on digital innovation, going so far as to create a brand new company in Berlin called Lufthansa Innovation Hub. Through the company, which launched in 2014, LHG searches for travel-based startups for possible investment opportunities, a venture that has proven so successful that it’s opening two additional branches in Singapore and China.

MODERNIZATION

According to Birlenbach, by year’s end LGH will have spent about 3 billion euros in new aircraft and services. By average, the Group will spend approximately 2 billion euros per year over the next few years in order to modernize its fleet, which currently sits at about 730 aircraft.

In May 2018, Lufthansa switched from the A330 to the A350-900 on its summer route from Vancouver to Munich. The aircraft will resume servicing this route in the summer 2019 timetable.

Austrian Airlines’ new Premium Economy Class has been fitted on all of its long-haul aircraft, featuring a total of 228 seats that were produced specially for LHG.

Lufthansa will be a launch customer for the new Boeing 777X, which will enter its long-haul fleet in 2020 (it’s not known at this time whether it will service Canada). The 777, which is considered more environmentally friendly and fuel-efficient than other aircraft, will feature a brand new business class.

In addition to the 777, Birlenbach said more A350s are coming. Lufthansa’s 747-400s will be phased out over time.

IN-FLIGHT AMENITIES

Lufthansa Business Class passengers on flights lasting more than 10.5 hours can enjoy the new Lufthansa Dream Collection, which includes a pillowcase, blanket and mattress topper.

On Austrian, passengers can take advantage of a full Business cabin where there’s a ‘Coffeehouse in the Sky’, a curated collection of up to 12 different brews made right in the galley. A chef – complete with a chef’s hat – also walks around the Business cabin to take passengers’ food orders.

SWISS passengers can book the Economy Light airfare on North American routes, considered the least expensive option for price-conscious passengers who only travel with carry-on luggage.

And on SWISS and Brussels Airlines, passengers now have the option to extend their trip by a few days with the new ‘Stopover Switzerland’ and ‘Belgium Stop Over’ programs, currently offered within certain markets, including Canada and the U.S.