Lufthansa Group: Closers Get Champagne (By 2020)

By | October 25, 2017

Announcing financial results today for the first nine months of this year, Lufthansa Group executives offered an update on the company’s distribution and digitization strategies. In short, it will be some time before the split from traditional distribution practices bears fruit.

As it moves to a Datalex-provided platform, Lufthansa Group carrier Swiss is expected next year to begin providing more dynamic pricing and specialized offers. Other network airlines in the group will not take advantage until 2020.

“There is currently a limitation to 26 booking classes due to the Amadeus and GDS restrictions,” Lufthansa Group CEO Carsten Spohr told analysts during a conference call. “We’re breaking that restriction” with a distribution strategy that offers “unlimited” opportunity for specific price points.

He said the company aims to aggregate passenger data from all its carriers.

Carsten Spohr

Lufthansa Group CEO Carsten Spohr

“We’re well aware of the value of the data we have,” said Spohr. “At the same time we will remain cautious about how to use that data. A big element of our commercial success is trust. You will see a very disciplined process moving forward using that data to improve offers to our customers, be it offers in terms of service or individualized commercial offers. If someone flies to Majorca twice a year, why not offer when we have open seats a third or fourth trip?”

He called it a “gradual process over the next years, improving every quarter.”

Lufthansa Group’s overall distribution approach, leveraging IATA’s New Distribution Capability, was already underway at Swiss.

It includes efforts toward more personalization for corporate clients.

Spohr referenced the Lufthansa lounge access deal with Siemens. “Others might want champagne for business people flying home from successful bids,” he said. “We’re happy to provide that as well.”

While data would be used to make unique offers, Spohr assured investors there would be no price discrimination based on age, location or other criteria.

“We are convinced this will increase our revenue per available seat kilometer,” he concluded.

Lufthansa Group this year hasn’t talked much about changes to its distribution system costs. Its full-year 2016 report referenced a “notable” 38 million euro increase, no doubt driven in part by the higher GDS prices the group’s airlines are paying after it opted out of full-content agreements in late 2015.

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Author: Jay Campbell

Jay Campbell in 2004 created travel business newsletter The Beat, in 2006 co-founded Travel Procurement magazine and in 2010 integrated them into Northstar Travel Media's BTN Group. He served as editorial director until 2013. Jay made his travel industry media debut in 1993 at the Air Travel Journal of Boston while earning his undergraduate degree in journalism at Boston University.

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