Lufthansa spending billions to remain top
THERE ARE STILL too many airlines in the world, limiting the industry’s profitability. While consolidation is taking place, it is still not happening fast enough. These are the views of some of the world’s airline bosses at the annual general meeting of the International Air Transport Association.
Dr Christoph Franz, chief executive of German airline group Lufthansa, says the industry still suffers from too much capacity. “This is due to – in a sizeable part – our inability to consolidate. In the USA today we look at 4-5 players running 85% of the market. We see a better more sustainable industry with growing profits.”
Franz says airlines have to adapt to a new and ever-changing world. Lufthansa, being profitable at group level at least, has set aside some core programmes to increase the level of profitability to earn more money in order to finance the fleet and investment in onboard and ground products.
“We operate from a country where the cost structure isn’t competitive. We’ve done what we can but at end of day we can’t really escape from it. So when you can’t escape those costs you have to invest into the quality of the brand and continue to establish as a premium carrier. That’s been the secret to our success but others are catching on.”
Franz says over the next three years Lufthansa will invest an average of €1m a day into the improvement of its product. As well as investment into a new fleet, which will boast features like new lie-flat business-class seats and a new premium economy class.
Lufthansa is one of the world’s most profitable airlines with about 120 000 employees. By comparison, SAA only has about 11 500 employees.