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LHs strategy: discussion thread for customers, investors, consultants & armchair CEOs

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LHs strategy: discussion thread for customers, investors, consultants & armchair CEOs

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Old Mar 27, 2014, 6:59 am
  #781  
 
Join Date: Oct 2007
Posts: 2,069
Originally Posted by gum
Thanks for your suggestion. I have had the "joy and pleasure" to drive a new car and the only thing I can say that it will fastly wear off.

After the artificial new car smell is away after some weeks only the depreciation remains.

And therefore my comment was really meant in a honest way. If I would have a *fat* bank account I just would book a holiday in China with at least visiting Shanghai and Xi'an.

Instead of a new car I would book nearly the whole 86th floor of a great hotel in Shanghai and enjoy the views.

Back to the thread: You can make an educated guess which airline, class and type of a/c I would choose.
With a fat account , one does not exclude the other
But I can assure you your other suggestions wears off as well.

You would probably venture up to C on the 380 with the old seat.
In my case I would take the last row on the G5.
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Old Mar 27, 2014, 7:02 am
  #782  
 
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Originally Posted by FD1971
I strongly recommend to start focusing on the slightly more important parameters that make an airline a high yield carrier, the network, reliability, safety and not so much a shower cabin onboard the A380 or a cheddar sandwich.
I'm not so sure that informed "true business travellers" happily travel with LH in C on routes such as MAD-FRA-PEK, for a price premium of 20-30%, on a mix of NEK and slippery slope, first developing back pain, only to be followed by sleep deprivation before an important meeting. Or do such pitiful ailments fade in comparison with LH's reliability and safety?

Originally Posted by FD1971
Word on the street, Air Serbia is a negotiations with major cheddar producers from Surrey to upgrade their sandwiches. I spoke to one of their Catering guys and according to some market research, they figured out that they will increase their market share by 659%, if they start offering slightly older cheddar on their sandwiches.
Catering was actually one of the few service aspects where Air Serbia significantly upped its game compared to its defunct predecessor (and most other European airlines). The menus went viral on the internet a few months ago. Result? 65% increase in pax numbers in January 2014, 77% increase in February 2014, both compared to the same months a year ago.

Oh, and have I mentioned that they have a proper C seat? I probably have.

Don't underestimate the passengers' need to be treated humanely.
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Old Mar 27, 2014, 7:03 am
  #783  
gum
 
Join Date: Sep 2004
Location: Southern Bavaria, Germany
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Posts: 1,517
Originally Posted by seat 1a
With a fat account , one does not exclude the other
But I can assure you your other suggestions wears off as well.
[...]
Interesting point of view! My memories concerning some holidays never wore off.

And I would really admire the possibility to travel the sights of China in great comfort. Also flying some deviations in order to experience China Southern's A 380.

BTW: Your choice of airline was fine, the type of a/c and the seating not.
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Old Mar 27, 2014, 7:03 am
  #784  
 
Join Date: Dec 2001
Location: hamburg
Posts: 1,390
FD,
i say i am HAPPY with alternatives to LH, you say i am whining.
i am tellling you i am SEN until 2017, you say LH ditched me.
i am telling you i paid € 4.600.- for HAM-MEL, you are saying
the price is € 1.800.- (and fail to give any proof since).

i do not know what your idea of "educated" is, but tunnelvision and
the unability to understand even the most simple messages makes me feel
quite sorry for those remaining part of what you call "a discussion
among educated people".

over and out...

Last edited by sunseeker; Mar 27, 2014 at 7:13 am Reason: removed deleted quote
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Old Mar 27, 2014, 7:13 am
  #785  
 
Join Date: Oct 2007
Posts: 2,069
Originally Posted by gum
Interesting point of view! My memories concerning some holidays never wore off.
Same here , and in most cases not the most luxuries ones

Quite the same goes for flights . One flight in LH C long haul was enough for me , the memory will stay with me forever . In fact I would not fly LH at all on long haul if I could not fly F.

Last edited by seat 1a; Mar 27, 2014 at 7:39 am Reason: Language hoopla
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Old Mar 27, 2014, 8:18 am
  #786  
 
Join Date: Jul 2010
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Originally Posted by N1003U
I have an 18-year-old Honda Transit that sort of fits that description. [...]
Originally Posted by gum
This is great. ^

I have never understood why so many people are chasing after a new car after 2-4 years just to have the sky-high depreciation of a new car.

Especially if it's their own and they can't offset these costs with lowering the profit position of a company.

Therefore just want to show my respect for your opinion.
Thanks for the compliment. I keep the "old Gherkin" (yes the old Honda is even green in color) around because the math works for me. But it is also emotional. Another partial reason is the engineer in me that refuses to let go of a perfectly functional machine just because it isn't as pristine as it used to be.

However, as seat 1a alludes, there can be more to product and profit than simple, deterministic, cold calculations--especially in a service business.

It is a favorite pass-time in this forum to whine that good-old LH is not the same product that is used to be, and the reality is that it (probably) would not continue to survive if it were. The question then is: "what should the product look like now and in the future so that both LH and its customers benefit?" That is an entertaining question to argue here...^

Originally Posted by gojko88
I still haven't heard why LH is a "premium" carrier compared to the ME3 in anything but name. Quite contrary, the latter are often referred to as "bling" airlines, while LH is still serving me the same Gherkin and Cheddar sandwiches on 350€ intra-EU tickets.
Quite the contrary to whining, I hear the question of gojko88 as something like, "What is the value proposition of an LH ticket compared to the alternatives--sometimes LH seems to customers like me like more money for a completely undifferentiated product?" (gojko88, correct me if I am off-base here). It is a good question to ask, independent of the market segment. LH should have a good answer.

Originally Posted by FD1971
Again, leisure traveler perspective...

Cheddar sandwiches, that' s actually cute...

I strongly recommend to start focusing on the slightly more important parameters that make an airline a high yield carrier, the network, reliability, safety and not so much a shower cabin onboard the A380 or a cheddar sandwich.

[...snide remarks redacted...]
I see this a little bit differently. "Network, reliability, safety" are necessary, but not sufficient, components of any major carrier's operation. Any global player that does not have these things is probably already dead. The weakest link among the major players is probably reliability, and that might be limited by the complexity of the technology and brittleness of the transit system more than by anything the carrier does. The strongest differentiator might be the network/schedule density, but depending on where one originates, and where one terminates, many networks might seem to be "best".

So how does a carrier differentiate itself? Tough nut to crack, IMHO. I am not convinced even the carriers themselves really know how to do it. Emotion aside, safety is a non-issue. Network and reliability are comparable, so it is hard to take the home-market customers from the competition successfully. Given that LH has one of the largest and wealthiest "home-markets", it is not surprising they are a bit larger and more stable.

So I suppose if one seeks an edge, one has to think about how to draw in the customers on the margin who can go nearly as easily one way or the other, say from HKG or JFK (or VCE ).

Given the competitive environment today, I would not be so fast to dismiss even the cheapest of the back-pack crowd, let alone other leisure travelers. I doubt any carrier of significant size can afford to do that.

Stout, sturdy, regular business customers are nice to have (and LH has many), but I am not sure they are sufficient for the highest levels of success.


Originally Posted by seat 1a
Yes , the world is full of mysteries , try a fat bank account . Or just the joy and pleasure for some to drive a new car
Which brings me to part of the joy and pleasure of this discussion: what does an air carrier need to do today to draw in truly non-captive and/or non-loyal customer? What customer problems can an airline solve for the traveling public that will differentiate it from its competitors? What unique experiences can it provide?
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Old Mar 27, 2014, 8:42 am
  #787  
 
Join Date: Jul 2010
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Originally Posted by gum
This is great. ^

I have never understood why so many people are chasing after a new car after 2-4 years just to have the sky-high depreciation of a new car.

Especially if it's their own and they can't offset these costs with lowering the profit position of a company.
OTOH, if a new car every two years makes someone happy and motivates her/him to work harder and put in extra hours or even an all-nighter once in a while in order to satisfy the customers, I bet that extra expense often more than pays for itself on the revenue side...as a private expense, as has been pointed out, that is a very personal matter that depends on personal attitude and resources.

Originally Posted by gum
Instead of a new car I would book nearly the whole 86th floor of a great hotel in Shanghai and enjoy the views.
If you are talking about the same hotel I am thinking of, I have lunch there once in a while. One needs to pick the weather conditions carefully, and a combination of air quality and inversion issues can make the views pretty crappy a surprising percentage of the time...but on good days, the views are quite stunning.

Originally Posted by gum
Also flying some deviations in order to experience China Southern's A 380.
For some of us true FTers, this kind of activity is the stuff life is made of--flying for its own sake, and not because of some silly business requirement or other need to be at a particular place at a particular time, but to strap oneself down inside an aluminum tube and hurtle through the air at Mach 0.8 +...

Last edited by N1003U; Mar 27, 2014 at 9:04 am
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Old Mar 27, 2014, 8:57 am
  #788  
gum
 
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Posts: 1,517
Just to begin with one of your questions

Originally Posted by N1003U
What unique experiences can it provide?
I am firmly convinced that a successful airline should rely on a healthy mix of business travellers and tourists as well. That said I really like the four-class approach of major airlines on long-haul travel.

With this differentiated approach to customer needs you can win the loyalty of many customer groups. This would include:

+ a fair recognition of frequent customers in terms of fast access to the flights (fast track)
+ a really flexible loyalty programmes where people can redeem for them and relatives even up to the last minute. This includes Upsellings with Miles and a good award availability. (As a thank you for all the people paying the salaries of the airline employees for 360+ days and redeeming once or two times a year).
-> I also would think of a kind of smart upselling within Germany and Europe. With this opportunity to upsell to Business Class there would be no need for the cr*ppy Germanwings approach eliminating Lounges/Business Class at some minor routes.
+ on the main routes within Germany: Full flexibility in Business Class and the flexible Economy ones. This would lead to slashing "J" surcharges for all flights. Also there should be a fair calculation of Y/B/M fares.
+ a First Class product an all routes. Also if only one row 1-2-1 can be sold. With extending a minimum check-in time of 25 minutes to all destinations. This would - for the first time - make First Class not only more comfortable but even faster.

An industry leading comfort in all classes would be the unique feature. I know that this would be a very brave approach to give Economy Class 2-3'' more space and going back to 33/34'' seating.

gojko88 wrote something about treating passengers humanely. I fully agree to that.

Uniqueness would also mean to slash those 99/109/119/129... fares within Europe. The first step would be to stop the NEK cabin. I can't imagine that SCORE works on the long run.
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Old Mar 27, 2014, 11:21 am
  #789  
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Originally Posted by gojko88

Don't underestimate the passengers' need to be treated humanely.
This is the main reason for bringing back the 732, isn't it?

A true C class seat, proper food, the 732. I wonder when they will start competing on the Venice-Moscow route...

Any idea how much of Etihad's profit comes from Air Serbia these days?
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Old Mar 27, 2014, 11:27 am
  #790  
 
Join Date: Aug 2011
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The 732 happened before the takeover and therefore has nothing to do with this.

I'm afraid I just cannot treat your question on profit seriously, as it's quite unreasonable (to put it mildly) to ask something like that for a six-month-old airline.

However, you do seem to confuse product quality with profitability. No one in their right mind chooses an airline based on its income statement.
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Old Mar 27, 2014, 11:41 am
  #791  
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Originally Posted by gojko88
I'm afraid I just cannot treat your question on profit seriously, as it's quite unreasonable (to put it mildly) to ask something like that for a six-month-old airline. .
Come on, EK is profitable since 23 years, so Air Serbia should better get it going soon.

Originally Posted by gojko88
However, you do seem to confuse product quality with profitability. No one in their right mind chooses an airline based on its income statement.
You are right, most of the high yielders pick airlines based on the quality of its catering, especially in Europe. Just last week, a colleague choose to fly Air Serbia on the DUS-ATH route, because of the food. It was a 25 hour itenary, but who cares, if you can get some decent food produced by LSG.

I have said it before, never underestimate the Nussini
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Old Mar 27, 2014, 12:27 pm
  #792  
 
Join Date: Jul 2010
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Originally Posted by gojko88
No one in their right mind chooses an airline based on its income statement.
However in some cases, I might have a look at the balance sheet (or think about travel insurance), before making a reservation very long in advance...
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Old Mar 27, 2014, 4:42 pm
  #793  
 
Join Date: Oct 2007
Posts: 2,069
Originally Posted by FD1971


You are right,
You should have stopped there .
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Old Mar 29, 2014, 4:27 pm
  #794  
 
Join Date: Dec 2001
Location: hamburg
Posts: 1,390
just booked MUC-CPT rt in F on EK for Euro 3.800.-; while "Lufty" is asking 11.000.-...
thank you, cinderella !
;-)
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Old Apr 2, 2014, 11:27 am
  #795  
 
Join Date: Mar 2009
Location: GVA,OPO
Programs: BD the last decent FFP
Posts: 1,856
Originally Posted by FD1971
[...]
Good old Popova again...

Nadja, please tell me whether you prefer Tupolow or Suchoi aircraft?[...]
Originally Posted by FD1971
[...]Your sources continue to get better day by day, Popova, Ruxandra, who's next, Beckenbauer?

[...]
Originally Posted by FD1971
[...]
Quick summary:

Analysts pro Lufthansa

Experts pro Lufthansa

Popova + some FT folks, aka the real expects contra Lufthansa...

[...]
Originally Posted by FD1971
[...]when your source (guuud erkraft Popova) was still in Kindergarden. [...]
Originally Posted by FD1971
[...]
I cannot wait for Popova to comment about it:

"Sri Lankaah is key to world market, if do not have happ there, you cannot succeed, even with goud eerkraft" [...]
Originally Posted by FD1971
[...], you quoted some of the 'leading' analysts covering the industry and LH, among them, Ruxandra Haradou-Doeser and Euromonitor's Olga Popova.

Ruxandra calculated the LH profit for 2014 to be around 900 mio. , the analysis by CASA resulted in a number twice as high, between 1.7 and 1.9 billion. Popova argued that LH needs good aircraft to expand (its profit...)

Where do you see the main differences between CASA and the ladies?
And from the new/cancelled routes thread:
Originally Posted by FD1971
I hope that 'goud erkraft Popova' was among the 25 journalists being invited.

...
You seem to have an unresolved issue.
In the Consensus Estimate it will be just an outlier if all the other analysts have another view.
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