Lufthansa is ready for special agreements with Russian corporate customers

ABT’s new partner, Lufthansa, is one of European aviation market leaders: more than 4 million air passengers monthly, 187 destinations in 79 countries, about 13000 flights weekly, 390 airplanes and 95,000 employees. ABT editor Svetlana Denikina talked to Lufthansa sales director in Russia Hokan Baverstrand about the company’s achievements, special corporate programs and business expansion plans.

— How do you assess the Russian market potential? Does the economy growth rate, and aviation sector growth in particular meet Lufthansa’s expectations?

— The Russian market grows steadily. This refers to the indices of the Lufthansa group as well. Moreover, in 2012 we managed to achieve a sufficient growth rate: almost 2 million air passengers chose our flights all over Russia, although in most European countries we experienced a negative trend caused by the Euro zone crisis. Even despite Russian economy’s vulnerability in and its dependence on European financial indices, travel sector in your country remains stable: in particular, this is proved by the air traffic growth trend. As for our global indices, in 2012 we saw an almost 30% increase in air traffic.

— What is Lufthansa’s flight geography in Russia and the CIS? Do you plan to broaden your destinations network in this country? What destinations do you consider the most important?

— We manage 7 destinations in Russia — Moscow, Saint-Petersburg, Nizhni Novgorod, Perm, Kazan, Samara and Ekaterinburg. Besides, Austrian Airlines, which belongs to the Lufthansa group, has flights to Rostov and Krasnodar. Unfortunately, we have arrived at the decision to stop flights to Perm and Kazan starting from March 2013 due to unprofitability of these destinations. At the same time the number of flights to Nizhni Novgorod and Samara will grow from 3-4 to 6 per week. As for the most important destination, it is Moscow, of course — the most important financial market in Russia.

— One of the latest hot topics has been fierce competition between traditional European air carriers and so called «low cost» companies. Some international players have come to the Russian market. Easy Jet has started flights from Manchester and London to Moscow, Ryannair has opened flights from Dublin. Does Lufthansa plan to fight for this market segment? Please tell us about your low cost air carrier, German Wings — how did it come to the Russian market?

— Despite ongoing changes in the aviation industry, only the full range of services is provided on all Lufthansa flights, as before. For example, free meals are always provided during the flight in economy class and the fare includes luggage registration and other basic services. In general, our business model allows us to cover all market segments and to meet demands of travellers with limited budget, as well as those of the most demanding customers.

Today German Wings performs flights from Moscow to Cologne and Stuttgart and plans to further broaden its destinations network in Russia. In particular, we are talking about flights to Düsseldorf, Hamburg and Berlin from Moscow and Saint-Petersburg. Passengers will be able to choose various service levels — low cost, as well as the Smart package, where the fare includes meals and luggage registration, or the Best package with restaurant service and greater room for legs like in business class. We are going to introduce them all gradually starting from autumn 2013.

— At the end of 2012 Lufthansa became ABT`s partner. What was the reason for this strategic decision? What do you expect from your cooperation with ABT?

— We hope for further intensification of partner relations with ABT and travel managers of leading companies present on the Russian market. These business contacts give our company, a supplier of corporate travel services, a great opportunity to know better demands and expectations of corporate customers; it contributes to higher efficiency and further development of effective dialogue between us.

— You took part in the ABT Educational session in December 2012. Please share your impressions.

— It was a great pleasure and I highly appreciated the participants` interest. This is a good ground for further professional growth of corporate travel market participants — both corporate customers and service providers.

— What is the share of business travellers in Lufthansa’s overall traffic?

— 20% approximately. This ratio is much lower in Russia than in Europe and the USA.

— Does Lufthansa offer any corporate programs to optimize costs of business trips?

— Yes, we have a whole range of special offers and privileges for corporate customers. A specific offer depends on a variety of factors — the customer’s demands, booking amounts, the destinations chosen and other details. After we conduct analysis, we will be ready to conclude agreements with companies all over Russia.

— Lufthansa is a member of Star Alliance, which unites 27 air carriers. What benefits do passengers get from your participation in this largest alliance? Tell us about your Miles & More program — what are its advantages for frequent flyers?

— Due to our membership in star Alliance we can offer our passengers a series of privileges, the most important of them are unified transfer facilities that let the passenger use one ticket for the whole destinations network of all air carriers that are members of the alliance. Of course, we can name many other advantages: in particular, they include airport lounges all over the world available to our frequent air passengers irrespective of which company of the alliance they are flying with. But you have to take into account which loyalty program for frequent flyers you participate in. For instance, Miles & More bonuses, unlike standard Blue, Silver or Gold cards, give you access to the privileged «HONCircle» level. Its participants are only the most active program members who have an opportunity to cumulate miles on certain flights of Star Alliance members. They include all Lufthansa group members, as well as Swiss, Austrian Airlines and Brussels Airlines. «HONCircle» participation opens the door to a wide range of privileges and extra services including transfer on Porsche cars, access to exclusive airport lounges and first class award winning passenger terminals in our hubs in Frankfurt and Munich where you can enjoy a delicious dinner or spa treatments. Even without this maximum level of comfort our Miles & More members definitely have a lot of privileges, especially starting from the Silver status which gives you the right for 3 extra luggage items, out-of-turn service and access to Lufthansa recreation rooms in airports all over the world.

— According to British Skytrax, which specializes in studying service quality of airlines and airports, Lufthansa is among top five air carriers in the premium segment. Do you consider this segment top-priority? What can Lufthansa offer its first class and business class passengers?

— Premium segment is one of our priority directions. I have already mentioned the first class terminal in Frankfurt, which is considered a unique infrastructure facility. Relax zones for business and first class passengers are available on almost all routes of our company. Not long ago a brand new terminal in Frankfurt was opened; it is intended for maintenance of the largest Airbus 380 liner. Besides, we continuously renew our flying stock and go on equipping all our long-range aircrafts with unique seats in business class. This work has already begun, but because our fleet is rather large, it will be finished in 2015 only. We are also happy to present our new invention — the first class seat; at the moment this project has been realized in Airbus 380 which journeys to Miami, Houston and San Francisco.

As for customers who need absolute flexibility and exclusive service, we have worked out a special concept — «Lufthansa Private Jet» which allows every passenger to create his own virtual flights schedule on a private plane. Herewith the client will cumulate extra miles to obtain the «HONCircle» status.

This is just a small part of what we can offer our most demanding customers.

— Please, tell us about your special Lufthansa Meetings & Events program. Who can benefit from it?

— One of Lufthansa’s aims is to work out solutions that would allow its customers to conduct business meetings and other events in a more efficient way. This offer is focused on customers who make a journey to participate in large conferences or exhibitions. Companies registered in this program can then use bonuses they cumulated to buy tickets to the event and back.

— Lufthansa was one of the first airlines in the world to abandon paper tickets: since 2008 all tickets for all destinations have been issued in electronic form only. Today apart from etix^® advantages the passengers can benefit from the eFly service that makes registration quick and convenient. What other technical innovations can you offer your Russian customers?

— As the Russian market is more susceptible to all new gadgets and mobile devices than any other market, it was this market that highly appreciated the investment that Lufthansa had been directing to technical development for many years. Apart from convenient registration facilities we are glad to offer Russian customers our new application for Apple in Russian: please, bear in mind, that this application is not available in local languages in many countries. The application is only several months old, but it has already won the reputation of one of the most popular mobile instruments. As for technical advances, I can not leave aside communication services, that Lufthansa provides in airport lounges all over the world and on board its airplanes — it is one of the main requirements of modern business travellers. Today free wi-fi is available on all long-range flights of our company: we use satellite connection which allows us to stay in contact even when we travel over the Atlantic Ocean.

— There was information in the press that Lufthansa was planning huge investment programs for the next few years. What are the main directions of your company’s development?

— I have already mentioned several investment projects aimed to modernize our ground services and facilities, in particular, lounges, and spoke about our brand new equipment in economic and business class cabins. These investment plans amount to several million euro. But the largest funds will be directed to our fleet renewal, both long-range planes and planes that fly across Europe. In the next two years we are going to put into operation the largest production airliner, Airbus 380, as well as Boeing 747-8 planes. Lufthansa also plans to purchase more than 100 aircrafts mainly for medium and short range flights. We undertake all these measures not only to broaden our network or to improve financial indices. Old aircraft replacement will be our contribution to environmental protection.

— What is the main factor of Lufthansa’s success, in your opinion?

— I would like to leave this answer for the future — let it be one of Lufthansa’s main secrets, even for me...