Digitalisation and greater personalisation of products and services will play key roles in the Lufthansa Group’s push in developing a “multi-channel landscape” as the European airline seeks to reduce its reliance on traditional distribution channels.
Speaking to TTG Asia in a phone interview, Lufthansa Group’s Asia-Pacific vice president, Dieter Vranckx, said that distributing its fares and products across different avenues form a natural proposition for the group, which comprises Lufthansa, Swiss International Air Lines, Austrian Airlines and Brussels Airlines.
Vranckx: GDSs necessary but inadequate
“We are very happy with GDSs as a distribution channels – they are an excellent way to distribute complex itineraries. But next to the GDS, the Lufthansa website is also a good platform, plus other additional distribution channels,” said Vranckx.
“In our changing world, it’s no longer about just a seat, but a seat plus meal, duty-free shopping and a lounge voucher perhaps, so we need a distribution solution that can showcase all these products. Selling a lounge voucher, for example, is not possible on GDSs.
“GDS is a necessary tool but it cannot display the functionality or shape of all our new products we have invested in. We want our B2B partners and customers to see all our products,” he added.
The Direct Connect Solution was hence rolled out close to two years ago as a new distribution strategy to reach out to corporates and agents. More recently on January 1, Ctrip became the first Direct Connect Partner for the Lufthansa Group in Greater China, enabling the Chinese OTA giant to display flights and services departing from airports outside of China and Hong Kong.
“Direct Connect is our new distribution strategy in all Asia-Pacific markets, not just in China,” Vranckx emphasised.
Vranckx (left) and Ctrip's Yuxiang Zhuang sign first Direct Connect partnership
As for the 16 euros (US$17.20) GDS surchage, which was introduced in September 2015, Vranck sees it as just “one element” in Lufthansa’s distribution strategy. The adoption in Asia has been limited, he told TTG Asia, as agents still see good reasons to book longhaul tickets through GDSs while China and Hong Kong do not allow surcharges.
Technology has been a great enabler of digitalisation for Lufthansa, which has established 2017 as year of digitalisation as it pursues a more efficient and customer-centric strategy with agents and corporates alike. “We see potential to digitalise our relationships with agents through automated solutions and auxiliaries. We want to make sure we are easy to deal with,” said Vranckx.
Beyond digitalisation, developing more purchase points in the distribution landscape, and personalisation of products for both B2B and B2C clients alike, industry partnerships has been identified as a pillar of growth for the airline group.
Lufthansa Group’s joint venture with Singapore Airlines Group, which was inked in November 2015, will see both airline groups cooperating in a “very specific geographic scope” spanning Singapore, Malaysia, Indonesia and Australia, as well as its home markets in Switzerland, Austria, Belgium and Germany, said Vranckx.
This partnership, which aligns both groups as network partners than individual carriers, should lessen the need for the resumption of Munich-Singapore services for the time being, he added.
Elsewhere in Asia, the group also boasts joint ventures with All Nippon Airways (launched in early 2012) and Air China (launching on April 1).
Lufthansa has deployed two of its three new Airbus A350s to Mumbai and Delhi while Brussels Airlines will begin Brussels-Mumbai services with five-times weekly flights starting March 30.
Lufthansa will from October 29 operate a daily Airbus A380 in place of the existing Boeing 747-400 on the Bangkok-Frankfurt sector for the winter timetable,increasing capacity of more than 35 per cent on this route from October 2017 to March 2018.