N1003U

Just to clarify my position: I support the idea that the product can be provided more efficiently than it is today. That is, I believe it is possible to provide better service at the same price (desirable when constrained by a relatively expensive cost-base), or the same service at a lower price.

I base my support of this idea on experience in several industries where very talented workforces are being wasted by outmoded and non-creative management structures. I think LH is completely wasting a HUGE advantage by not using their personnel and technical know-how as well as they could.

gojko88

Say that you have sufficient pax on a given route to fill an A380. Sending two 250-seat planes per day to that particular destination instead of a single 500-seat one is preferable to most airlines because it provides for more flexible scheduling (e.g. one flight in the morning and one in the afternoon), rather than having something to do with the actual route network or cost per passenger (although I'm not excluding these as relevant factors, of course).

That's what I see as the main reason behind the overwhelming popularity of A350/787 as opposed to A380/747 - airlines seem to be opting for two of the former even where they could have deployed one of the latter. What's more, there are few routes, even today, that can support the seat capacity of A380/747 in a profitable manner, and those routes are either iconic city pairs or dictated by simple geography - I wouldn't expect too many takers for a morning flight from EU to the Far East, for obvious reasons, so pax are funnelled to the red-eye flight operated by a larger plane.

weero

It squares your probability of a failure (MX, crashed, hijacked, crew sick, missing) though while it nearly halves your cost when it happens. There shouldn't be a trivial answer to the wiser deployment.

Didn't SQ substitute in the opposite direction? Dual 777-300ER routes for a single A380?

TRAVELSIG

What does this mean? Are you able to clarify please?

volta

Actually, I find this point very interesting. LH is treating surcharges as profit center.

San Gottardo

LH "treats" surcharges as a profit centre?

Is that something you know? In which case I'd be interested how that works. What are the costs that have to be managed by that profit centre? For instance, do they manage the purchasing of fuel incl. the hedging agains revenue from fuel surcharges?

Or is this something you infer from the statement that LH plans to generate EUR 60 million from surcharges? In which case your makeing an erroneous conclusion. A line in the income statement is *not* the same thing as a profit centre.

Not saying you're wrong, but I have trouble imagining how that works and I wonder whether you aren't drawing false conclusions from the facts published by LH.

gum

Dear San Gottardo,

a tiny correction for your misquote. The text fragment "As pointed out so often before...." was not written by me. You have quoted another FTer here!

gum

It is a completely different culture of innovation, economic development as well as general state of the market in the UAE then compared to the former Free Western European States like Germany. @:-)

Whereas the European governments often are in the worst sense of the wording retrograde respective emphasizing angers, possible threads and risks for society the Sheiks are great in developing new ideas and reshaping the country and its significance in the world. ^

I *think* (although can't highlight it with the corresponding date) that the governments there sometimes have the same attitude which you can find at high-net-worth individuals (regardless of country and age): Everything is possible and the revenue stream will never end.

This attitude is my criticism on the strategy of Emirates: The often stated huge order of A380 including the worldwide increas in available seat kilometres will be one of the most demanding challenges in the airline industry.

Therefore I am convinced that "back to reality" will mean a not so steep path of growth including resizing the strategy and especially the entitlement to reshape an industry. If you compare the long history of Lufthansa with the nearly newborn Emirates you will get my idea perfectly.

Whereas some European political leaders are only "administering" their country, the Sheiks are on the other side of this scala: They are real entrereneurs.

And as every founder has to undergo and strive: They make some not so good decisions.

And as you can see here:

It seems that the real estate boom in Dubai comes to an end.

http://blogs.wsj.com/middleeast/2014...-draws-cheers/

Project developper Emaar makes an IPO for its retail branch. That is a hint that these assets will underperform respectively gain value not now but in some years or in many years.

The art of IPOs is to get the best price for the shares and sell them (including a story) to the new shareholders. Than it often can be viewed that the shares drop for some time and regain strength after that. That is what I mean or feel about a soft landing of the economy of the UAE.

For the Europen carriers this is good news: The times of the never ending financial means of the Sheiks will come to an end. After this tiny bump the economy of the UAE will recover or not. This is depending on the political stability.

And Lufthansa is more than ever able to convince the passengers by the technical reliability, history of the brand and new products like the great First seats, the B747-8 Upper Deck Business Experience and the Premium Economy cabin. ^

TRAVELSIG

I thought Lufthansa was eliminating First on several routes?

And while I do like the upper deck business class- it can hardly be considered innovative- many airlines have had this for many years on both Boeing and Airbus products. My first time in an upper deck business class product was ex-YUL on AC on a B742 in 1991 so not even for Star Alliance is this new or exciting.

Premium economy as well- Eva introduced this first in 1991 so this is also not really a new idea.

As for the brand- I completely agree with you- Lufthansa is a great brand indeed- this I don't really see being pushed forward however with "Nonstop You" nor with for example outsourcing the majority of front line airport staff who are the only contact people that most customers could reasonably expect to be in contact with other than on the aircraft itself.

Lastly- if they are able "more than ever" to convince passengers then why:
1. Did their load factor increase more slowly than overall growth in passenger traffic?
2. Did their yield decrease?
3. Do they need a SCORE program to radically eliminate costs- as opposed to using this "more than ever" convincing to accelerate top line revenue growth?

gum

Weero I think that you have missed the core value of the contribution made by FD1971!

He described many tricky (and for the involved parties sucking) measures of the LCC to get money out of people. Like taxpayers, naive local politicians and other people not flying at the moment.

I think that FD1971 wanted to say that the fare policy of the LCCs is not honest - if you speak openly and in public.

I remember an advertised 1 Euro for of one of those LCC which was - in fact a fraud. Noone was able to book the fare unless an overexpensive return flight was added. One-way flights where the "1 Euro" fare was available were priced ocmpletely different.

Many years have passed since that "offer" and now the LCCs have refined their revenue integrity. Charging nearly for everything which Lufty automatically includes in price.

So the LCCs are the kings of unbundling as you may say but no serious competitors.

gum

Yes, this is IMHO the only major error in their longhaul strategy.

Many moons ago I was travelling on an A340 of a South-American oneworld airline. They had only one row of First Class (2-1-2) and offered that product.

But added much value to their image and also as the ultimate perk if a frequent customer wants to pamper himself or his family. Upsellings with miles were available and therefore this class of service was affordable.

+ So if I would be Lufthansa I would resize the First cabin on some A346 to one row with four seats and allocating that space to the brand-new Business class product.

+ Slightly more difficult is the solution on the A340-300. Due to the masive size of the galley/cabine divider before the doors 2L and 2R you would sacrifice four seats of First in order to get six seats of New Business Class. In terms of revenue this should be ok. The 30 or so centimeters could be used for some upgrading of the interior like an Espresso machine or another hot beverage layout.

TRAVELSIG

Great idea and suggestion! I would also be happy with this- I think this is what AF does now on some routes as well?

primetime23

Unlike LH with their J9/CDZ0 booking class scams or those ridiculous fuel eh sorry, international surcharges, on award tickets. And I remember countless instances of the LH booking engine showing me the lowest price in the time matrix - and then magically when selecting the marked cheap outbound, all return flights went to the most expensive booking class.

BTW, are you and FD1971 one person? (The excessive use of smilies, calling Lufthansa "Lufty", alternating LH is the greatest marketing sermons / EK is horrible posts etc.) Just curious.

Lack

Like selling fully flex tickets and then doing J9 C0 D0 Z9 P9?

I'm pretty sure FD1971 was a very strong supporter of that bait and switch policy when anyone mentioned Lufthansa sub 500 EUR long haul sales being advertised.

gum

Sorry that I can just say crystal-clear: No they are not one person! Even don't know FD1971 in person and he/she is no relative of mine.

The one thing I really like to admit is the term Lufty!

Have learnt it here and use it as a nice abbreviation for an airline which is on the way to the five star rating in all classes. @:-) Astonishingly enough I don't find it by search engine and therefore it may be an invention of FD1971.

Hope this helps.