Dirk Van Nieuwkerk, Director General Mexico and Central America of Lufthansa, spoke to Mexico Aviation & Aerospace Review on the role of innovation in the airline’s strategy.
Q: What would you highlight as the main competitive advantages that have allowed Lufthansa to achieve positive results?
A: The Lufthansa Group is the leading aviation conglomerate in the world. We had a turnover of €32 billion (US$38 billion) in 2016 and combining our different airlines we currently have 674 operational aircraft that result in over 1 million flights annually. We serve 308 destinations in over 103 countries and only in 2016 we transported 110 million passengers.
We had a very successful first half in 2017 and we had our best year ever in our Mexican operations. We have also been voted by SKYTRAX as Europe’s best airline. This market research company surveys over 18 million passengers in 116 countries. Our investments in technology, digitalization and customization have paid off and these recognitions let us know that customers appreciate our products and our strategy. Our goal now is to be recognized as a five-star airline not only in First Class but across all our services and to be a premium alternative among hub airlines.
Q: What impact will the bidding for Air Berlin have on Lufthansa’s operations?
A: This is still an ongoing negotiation. Lufthansa is bidding for part of Air Berlin and we have already leased 38 airplanes from Air Berlin to enlarge our Eurowings division. The airline business grows 5 percent on average every year. There is a need for mobility but leisure is growing significantly more than business flights. Eurowings targets leisure traffic and we had suffered some limitations in our available aircraft. With the leasing of Air Berlin’s equipment, we have managed to grow our capacity and the bidding for the airline is the next step in our strategy.
Q: How have you innovated to offer the best options to the customer?
A: Innovation is a key part of our strategy, not only regarding our fleet but also our on-board products and services. We recently introduced a new class called Premium Economy and we have invested significantly in renewing our services in all our available classes: First Class, Business, Premium Economy and Economy. This includes new upgraded seats, upgraded entertainment systems, wireless internet access and a new signature restaurant service for our Business class. New products require new processes as well but we have received positive feedback from our passengers, both private and corporate. As another example of innovation, we have stopped distributing printed newspapers and magazines. Clients can now download different titles from our e-journal platform, which helps us reduce weight and thus fuel consumption. This year we are also focusing on digitalization and between now and 2020, we will invest €500 million (US$596 million) in digitalization, customization and other innovation projects to a cost-based pricing approach. The market is dynamic and we must strive to be the best airline not only in Europe but around the world.
Q: What plans does the company have to renovate its fleet?
A: We have a strong renovation plan that will be completed by 2025. We have over 180 plane orders valued at €33 billion euro at list price. In 2017 the Lufthansa Group will receive 40 new planes. Having new aircraft allows us to reduce our carbon footprint and implement more efficient processes, while offering the latest technology to our passengers. We have already received our fifth Airbus A350, SWISS is employing Bombardier C Series planes and we are getting the new Airbus A320neo.