Lufthansa cuts first-class fares to lure paying customers
German airline knocks about 40 percent off the price of a first-class seat, while tightening restrictions, on some flights.
Northwest travel guides
The German airline Lufthansa said sales of first-class tickets have risen more than 10 percent following a revamp of its premium cabins and the introduction of cheaper fares with less flexibility aimed at leisure travelers.
The trimming of first-class routes to focus on the strongest markets, coupled with steps to fill seats with paying customers rather than passengers burning air miles, has also spurred uptake, Jens Bischof, sales chief for Lufthansa’s main brand, said in an interview at the carrier’s Frankfurt hub.
“There’s good demand and it’s very robust, not just a marketing peak,” Bischof said. “We try not to fill first at any price. It’s an exclusive, innovative product.”
Lufthansa decided to remove the first-class cabins from a third of its older long-haul aircraft, with the remaining 70 receiving an upgrade that includes more comfortable seats fitted with thicker mattresses and a more elaborate culinary offering. The majority of the aircraft due for the refit have already been overhauled, driving the sales gain, Bischof said.
Lufthansa’s repositioning of its premium product comes as Gulf carriers led by Dubai-based Emirates lure affluent long- haul passengers with scores of new widebody aircraft.
The German carrier’s cut-price, leisure-oriented offering knocks about 40 percent off the price of a first-class seat for travel to about 30 destinations, Bischof said.
Lufthansa was advertising first-class flights from Frankfurt to Bangkok in January for 4,299 euros ($5,785) this week — less than fully flexible business-class tickets can cost. With a 400-euro fee for cancellations, the tickets are ill-suited to an unpredictable schedule, and so won’t eat into lucrative corporate sales.
Chief Executive Officer Christoph Franz said separately that Lufthansa may have stuck with a comprehensive first-class network for too long, and that the product risked becoming “an upgrade class” for people redeeming frequent flier points.
“For an entire product class to be more or less serving as a mile-burning product, that’s not the right thing,” the CEO said in an interview in New York on Nov. 6. “It’s a top-notch luxury product. We want to have passengers essentially for first class, with a few upgrades.”
Lufthansa also last year tightened its rules to bar most employees from flying first class on business-related trips.
Franz, who leaves Lufthansa next year to become chairman of Swiss drugmaker Roche Holding AG, said he was “surprised” by the rapid success of the revamp and parallel efforts to stimulate demand. “Hopefully we can continue in the same direction in the next two years,” he said.
Bischof said there’s no trend away from first-class travel to business jets, a service Lufthansa offers in partnership with Warren Buffett’s NetJets Inc., which supplies the planes.
The airline operates more than 1,000 private jet flights a year, with about one-third of its customers also booking a first class ticket. “There is no cannibalization,” Bischof said.
While Lufthansa doesn’t break down sales for first class, the share of premium revenue on long-haul flights, including business berths, was 47 percent for the first nine months, the lowest proportion in 4 years. That revenue is generated from just 20 percent of customers, Bischof said.
Lufthansa, which has orders for 295 new planes, aims to become the first western airline to receive a five-star rating from airline-review firm Skytrax by 2015, having already been awarded that rank for its first-class service.