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Old May 11, 2012 | 7:55 am
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DownUnderFlyer
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Originally Posted by Unterwegs
I believe the problems LH has in Asia are self inflicted. Customers in premium classes with paid tickets have a choice of several airlines.
Airlines make money in business class and first class.
Looking just at the hard product in business class: Most of the asian carriers are moving to some kind of full flat herringbone layout where every seat has aisle access. This is usually 3 across on the A3x0 or 4 across on the 777. Compare this to LH where (at least from the pictures i have seen) LH will have 6 across with (also just from pictures) significantly less space.
Some airlines (NH for example) has a staggered layout with 8 seats (all seats with direct aisle access) on the 777. LX has 9 seats across on the 3x0, with is less wide.

Same is true for First. The CX seats in F are fantastic. One seat is big enough that 3 people can have a meal - two sitting on the seat and one on the footrest. LH has 4 across in the smaller 3x0 or the smaller 380 upper deck. Most other airlines have 4 across on the 777 - which also results in significantly more space for the passenger.

Don't get me wrong. I like the new LH F product, l like the new LX F product even better. But when i pay for a ticket and price/connections are similar I normally pick one of the asian carriers over LH/LX without thinking - especially in business class.

To make things worse: even American Airlines, an airline i usually try to avoid just announced their new business class seats: they are similar to CX, 4 across on a 777 with (difficult to judge from the pictures) around 50 % more space. Pictures here: http://boardingarea.com/blogs/viewfromthewing/

I believe LH needs to rethink their premium strategy, especially their decision for the hard product in Business Class. Otherwise they will go in a downward spiral similar to what the US carriers went thru where at the end a significant portion of business class and first class will be filled with free upgrades or employees (like it is now on US carriers) and the paying customers will take their money elsewhere.

It will be interesting to see over the next few years if the asian carriers will become more profitable and LH will be going in the direction of the US carriers.
But this is kind of the problem for LH. All their competitors offer a lower density and a lower price. With LHs production cost they need more density and a higher price to be profitable. If LH would just introduce a similar hard product they would get into real trouble as they couldn't get the revenue to make up for the extra cost.
Bottom line: They get squeezed on the cost side. Asian carriers take some of that cost advantage and translate it into a better product and some into lower fares. The perfect storm for LH.
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