Lufthansa Group’s managing director of corporate sales and regions North America Donald Bunkenburg on quality, service and the bottom line
BT: The airline industry as a whole has seen something of a turnaround in the past couple of years. What’s the outlook for Lufthansa?
BUNKENBURG: We actually had a good year. Excluding the one offs we were able to increase profitability by 62 percent. The profits were driven on the passenger side and also on the MRO side, but really pretty much across the board all businesses have been profitable.
BT: You mention the Lufthansa businesses; tell us a little about how Lufthansa is structured.
BUNKENBURG: Lufthansa was at one time a fully integrated company with all these companies as divisions. Lufthansa Passenger, Lufthansa Cargo, LSG SkyChefs, Lufthansa Systems and Lufthansa Technik. In the mid-90s, we were looking at how best to set these companies up, and we saw that many companies or many services that support the airlines were actually profitable, but the airlines weren’t. So that’s when we created Lufthansa Aviation Group. We said let’s spin these companies off into their own companies, and keep them in the Lufthansa Holding. But let them also compete within their own individual spaces so that they can offer a product
that’s competitive. If you’re not constantly being competitive and innovative, you’re losing your edge. So we have these cutting edge companies that are part of the Lufthansa Group, but they also serve the Lufthansa Group.
BT: How does that help with the profitability picture?
BUNKENBURG: This has actually been a good business model for us over the years. It’s insulated us from the ups and downs of the passenger airline business. So a lot of these businesses offset the cyclicality of what we have on the passenger side.
BT: Lufthansa has always been highly rated for its quality. What’s on the horizon for your customers in terms of the next level of service?
BUNKENBURG: We want to become a leading Five Star airline in all our products, based on the Skytrax model. We’re already a Five Star airline in First Class, but we also want to have our Business and Economy cabins, lounges, ground experience, all be Five Star. I don’t know if you know what it takes to become a Five Star airline, but there’s a whole list, a book of criteria for each individual component. So we’ve talked to the Skytrax people, and they’ve done an audit of us. We now have 12 working groups using those to improve the customer experience as a whole.
BT: You’re adding a Premium Economy product to your
offering. What differentiates Lufthansa’s Premium Economy from other airlines?
BUNKENBURG: The new premium economy seats are completely different seats. The concept is not to have the same seat with just some additional seat pitch, but have completely different seats. It’s also less seats; for example if normally we have a 2-4-2 configuration, this will be 2-3-2. So it will actually be wider seats but also with more pitch. There’s also a different service concept. The tray service will be on china; you’ll get a welcome drink, you’ll get an amenity kit. So the service itself is a totally upgraded experience.
There will also be bookable through-fares on these. So it’s not like we’re selling it as a sell-up, as some airlines do.You can actually purchase a through-fare that we’ll have worldwide.
BT: In the changing airline business, what challenges lie ahead for Lufthansa?
BUNKENBURG: We’re in transformation. We’re looking for more efficiencies. We’re making sure we’re lined up with our partners all over the world. It’s part of a much more complicated world. If we want to compete, we have to make sure that we have top quality.