Lufthansa CEO Karl Ulrich Garnadt talks with Travel Weekly's Kate Rice about the line's efforts to simultaneously deal with competition from Persian Gulf and Asian carriers on the high end of the market and low-cost carriers on the price-sensitive end.
Q: How is Lufthansa positioning itself for the future?
A: We want to make sure that Lufthansa remains one of the leading aviation groups in the world. In Europe, we are seeing a growing share of low-cost carriers for European traffic. So, obviously, things we have to do include new product features, which enable us to offer competitive pricing. On the other hand, Asian carriers and especially carriers from the Gulf states are taking larger market share in the long-haul markets, and most of the competition is from their high end. It's clear we need to respond to both scenarios.
Q: How are you responding in what has always been Lufthansa's strength, business travel?
A: We are in the middle of the biggest investment program in Lufthansa's history, 1 million euro per day, and we are doing this for three consecutive years. A big chunk is to upgrade our entire long-haul fleet of more than 100 aircraft. We have converted about 60% of the fleet to the new business- and first-class product with all lie-flat seats. We are in the process of introducing premium economy, which offers 50% more space overall and is very well received in the market. This is really a top priority. It is our intent to become the first Western five-star airline. And it's not just five-star hardware. Your service to customers must be five-star.
Q: On the other end of the spectrum, how are you responding to the low-cost challenge?
A: The majority of growth in the future will come from leisure travel. We lack destinations and product features that are attractive for some leisure markets. We are working on various initiatives to participate in those markets. In the European scenario, we are in the process of moving all nonhub service into the brand Germanwings, which operates all nonhub service within Germany and Europe.
Q: What differentiates Germanwings from Lufthansa?
A: Germanwings has very attractive fares, starting with a flight-only feature, which we call Basic; then an intermediate fare, which we call Smart, and there you can get some additional features; and the Best product for our traditional customer, which has all the food, drinks and space of premium service.
We are extending this operation to Eurowings, which is now marketed under Germanwings. It will be just one brand, either Germanwings or Eurowings. With this new setup we may start in other European countries where we see low-cost carriers growing and we need to compete on cost. This gives us an option to grow outside of our traditional markets.
Q: What about long-haul for leisure or price-sensitive travelers?
A: Our long-haul service configuration is less successful to leisure destinations. So for Panama City or Cancun we need something tailor-made for that, which is why we have converted our long-haul configuration on about 14 aircraft to give us a class mix to give us entry possibilities in more leisure-oriented markets. We are also working on a project to look into a real low-cost operation for long haul. We are still in proof of concept on that one and will decide in December.