With a raft of new aircraft and a brand refresh waiting in the wings, we speak to Lufthansa CEO Carsten Spohr about what lies ahead for the German flag-carrier.
If you were an arriving passenger at Munich Airport on the first Thursday of February you’d be forgiven for thinking that German flag-carrier Lufthansa had sold its sprawling glass maintenance hangar and the new owners had turned it into Bavaria’s biggest and most thumping nightclub. Through moderate fog, both inside and out, spotlights and led arrays moved to the pulsing beat of a soundtrack that signalled that something was about to come to life.
Was all this fuss a celebration of Lufthansa’s strategic tie-up with Etihad, announced the day before? If so, where were the sheikhs from Abu Dhabi’s ruling family? Or was this the much-rumoured debut of Lufthansa’s new corporate identity? Nein, nein, you’ll have to wait at least another six months to get a peek at what the carrier’s cooking up. (If, like us, you’re a fan of Lufthansa’s corporate identity and feel it’s fine just the way it is, worry not: we’ve had a preview and Otl Aicher’s original work is left intact.)
The cause for celebration was the unveiling of a gleaming Airbus a350, the newest addition to Lufthansa’s long-haul fleet. Named in honour of the city of Nuremberg, the symbolism of the fact that this new aircraft was making its debut in Munich and not the HQ hub of Frankfurt was not lost on the audience. Indeed the evening’s host, Lufthansa CEO Carsten Spohr, went so far as to say that Munich has the best airport in Europe by a wide margin – cue thunderous applause from the crowd of 2,000 crew, Bavarian stakeholders, media and suppliers.
Spohr hasn’t had the smoothest of flying conditions over the past two years with strikes, terror attacks and the Germanwings incident all punctuating his watch. But with the Gulf carriers in a less boisterous mood, a huge order book of new aircraft coming online and upgrades lined up for other group brands, we caught up with him to talk about the German moment, the attraction of service culture and what’s next for his sector.
MONOCLE: In a globalised world, how important is identity? We’re in the heart of pretzel country here: how important is German identity when you’re running a legacy carrier?
Carsten Spohr: Germany is growing in importance in this new globalised world. The country needs to understand it should play a bigger role. When you’re forced to play a bigger role you better understand your qualities and I think, with all modesty, Lufthansa is a showcase for that – the idea that Germany stands for stability, responsibility and something you can easily depend on for premium quality and premium style. Also Germany stands for innovation. Not necessarily loud or colourful innovation but innovation in the core of things. Like driving a German car, flying Lufthansa not only gets you from A to B but makes you feel good about it.
As for globalisation, I think the aviation industry has reason to be confident. We are not only driven by globalisation, we drive it. When it comes to those in the world who have doubts about it I think our message must be, “We are the force for good; we are the good guys of globalisation.” In aviation we bring people together and make globalisation an experience. I’m confident that it cannot be stopped or slowed down, even though some people are trying hard.
M: Coming back to your point about the need to rethink Germany, are passengers also attracted to a European approach to premium?
CS: I very much think so. Especially in the US but also in other markets – and even more in some emerging markets – to spend your money on something German is showing you know style and quality. It’s no surprise that flying Lufthansa First or Business Class is part of that. In the past, we probably didn’t dwell enough on that. Let me compare this with the car industry again: we can learn from them how to position a German product. Being German, being special, being more than just “transport” by standing for “travel”: that is something that Lufthansa can take more advantage of in future.
M: Do European legacy carriers have a different story to tell vis-à-vis the Gulf and Asia? Consumers are more concerned about ethics now and we know staff don’t get great treatment at a lot of the Gulf carriers. Does the passenger understand that part of the ticket price is down to the fact that people get a pension and days off here? Can Europe come back fighting that corner?
CS: If I were convinced that aviation was all about price then I would probably leave the company and close it down now. Lufthansa will never be able to compete [on price alone]. Actually Germany wouldn’t – it is not the most successful export nation in the world because we beat everybody else on price. So the fact that we treat our people better is because staff are a very important part of our brand. We don’t have people who just work for money – there is a special motivation to be part of this brand, to leave your ID card on your jacket a little longer than necessary when you leave the building.
Regarding the rights of staff, even with the strikes – and it’s no secret there have been more than I would like – you will never hear me complain about the rights of Germans to go on strike. It allows us to produce the quality I mentioned. So I go along with that and I think the days of fast-and-cheap success have come to an end in many parts of the market.
M: What does it mean for the industry if the rapid growth of the Gulf carriers slows down?
CS: I’m convinced we will see a phase of more consolidation in Europe and a phase of more rationalisation in the Gulf. There will still be growth but I think it’s now obvious that not all growth plans will turn into reality and as an industry globally, we need a better balance of supply and demand, which is why Lufthansa has been fighting so long now for markets to only be as open as they are fair. Fair trade is the basis of fair competition and I think we have hopefully seen the worst of this. Coming back to the first part of our discussion, I think quality has taken back its role and we are happy to compete with any competitor when it comes to quality.
M: Staying with staff, we’ve seen airlines importing people from around the world to reduce costs. Is there a future for German staff at Lufthansa?
CS: There is no Swissness in Swiss and no Austrian-ness in Austrian Airlines and no Lufthansa-ness in Lufthansa without national staff onboard; that’s the core of the brand. Of course we have a number of foreigners onboard our planes for language reasons and because Germany is a place to which other people now migrate; it is becoming more colourful. But I definitely don’t want to hire my staff abroad to bring my costs down because I’d lose a core element of my brand. Even with all the growth in aviation we should never forget that it remains an emotional product and the more emotional a product is, the more the soft elements – character, nationality and heritage – come into play. I’m happy for [other airlines] to [hire abroad] as it gives us even more room at the upper end of the market for our quality and style.
M: On that, how do you make service attractive when people want to go off and develop apps?
CS: Developing an app sounds wonderful and innovative but I’ve seen people do that and they sit on laptops all day. I think digitalisation is probably making our jobs, in relative terms, more attractive. We are one of Germany’s favourite employers. Every 20th application that anybody writes to any company comes to us and we hire more than anybody else in the country. This year 3,000 kids will join Lufthansa as flight attendants, pilots and mechanics. We have a few challenges but being an attractive employer isn’t one of them.
M: When we look at the sector, particularly short-haul in Europe, where is the differentiation?
CS: When it comes to short-range flying I see an assimilation of hardware, seats and number of seats per aircraft. In future there will be limited room for variety. So what do we focus on? Part of it is about how we individualise our relationship with the customer, how we use digitalisation to make travel before and after the actual transport more of an experience. On long-haul, the product itself, the stay onboard – drinking, sleeping, being entertained – has not lost its focus when it comes to product design.
M: If there’s no difference onboard beyond branding, does it matter in short-haul whether I’m on a Lufthansa or Eurowings plane? Is the future: Eurowings short-haul and Lufthansa long-haul?
CS: No, we definitely want Lufthansa to maintain a short-haul fleet for its hubs in Frankfurt and Munich. We’re having negotiations with our unions to bring down the cost in short-haul to allow us to live up to that strategic goal. And more than other competing airlines we need a hub to function well because Germany has no London, Germany has no New York; we have artificial hubs that only work because they have such good systems.
M: Some people put an awful German “S”-word in front of Eurowings. If I live outside your hubs, Frankfurt and Munich – in Hamburg, say – will I be able to fly Lufthansa to London?
CS: I probably can’t fix putting Lufthansa back on that route. For a premium short-haul carrier to be profitable it has to work with a hub and a long-range system as we operate in Frankfurt and Munich. And, by the way, with Swiss in Zürich and Austrian Airlines in Vienna.
On point-to-point too, many passengers go for price. But Eurowings is, in terms of quality, the best European point-to-point airline. We never wanted to be lowest in cost: we always wanted to be best in terms of value for money. That’s what Eurowings is striving for and we have come a long way with very few “S”-word mentions from our passengers.
M: So what will be the next step with Eurowings?
CS: As soon as we’ve stabilised our operation in long-range Eurowings and it’s starting to look good, we will begin moving Eurowings to point-to-point to other German cities. With new aircraft technology eventually becoming the standard there will be a lot more options. There is huge potential for us to operate long-range from these places in the next decade.
M: And finally, as a former pilot, what do you fantasise about when you look out at the tarmac?
CS: One of the unique qualities of this industry is that there is so much room alongside the hi-tech for emotions. I fly once a day and still look forward to it; I’ve flown thousands of hours and I enjoy every single one of them. Even with the growth over the past few years, aviation hasn’t lost any of this. That’s why I’m so glad I took the decision to join this industry – which is the second-best after magazine publishing.
1966 Born in Wanne-Eickel, Germany
1991 Graduates from Karlsruhe University with degree in industrial engineering
1993 Earns his commercial pilot’s license from the Lufthansa Flight Training School
1994 Becomes head of central recruitment for Lufthansa
1995 Named personal assistant to the chairman and CEO
1998 Made responsible for European regional partnerships
2000 Named vice-president of alliances and co-operations
2004 Joins executive board of Lufthansa German Airlines
2007 Made executive board chairman and Lufthansa Cargo CEO
2011 Joins executive board of Deutsche Lufthansa as CEO of Lufthansa German Airlines
2014 Made chairman of the board and CEO of Deutsche Lufthansa
What’s on the order books for 2017
7 Airbus 350-900s for Lufthansa
17 Airbus a320 and a320neos for Lufthansa and Eurowings
14 Bombardier CSeries for Swiss
2 Boeing 777-300s for Swiss