You may recall a recent Lufthansa TVC where a man and his grandson have a bespoke Indian experience on-board German carrier Lufthansa. Dr. Roland Schϋtz, Senior Vice President & CIO Information Management, Lufthansa reveals the strategy behind that campaign, and how the airline is embracing Digital to become more services-oriented.
Tell us how Lufthansa is enhancing the customer experience. How will you differentiate your services from other airlines? How does technology help?
RS: Personalisation and understanding the customer, is a key issue for us. The passenger’s digital journey begins weeks before he actually gets on the plane. So we want to offer a digital companion that services the customer throughout the journey.
We take a holistic approach. It’s not just the core product (the seat in the plane), but it is also about the interiors and getting service, the sold items etc. We try to understand the profile of the passenger, his needs, habits etc and then deliver a complete solution – everything he might require on his journey. This includes on-board entertainment.
Personalization is especially important when we sell our premium offering. Every major carrier is trying to undergo this type of transformation.
In the direct channels we sell a “travel experience” and not just a flight that gets you safely to your destination. We avoid selling commoditised services.
Our strategy is to evolve the classic hub approach in the premium segment. We will also evolve the point-to-point approach in the low-cost segment. In the low-cost segment the importance of direct sales through a website is even more important, than the traditional way of doing bookings (through a travel agent).
We have to cover our whole offering with a seamless digital experience and allow the customer to choose according to his specific needs, across various digital channels (app, website etc).
There is a Lufthansa app and we will soon offer it on the smart watch. We are now providing an open API to our back-end systems, and this will allow third-party players to access our systems. It is important for us to be accessible across various media.
We also engage with startups and innovative companies who could potentially enrich our holistic travel experience offering. Innovation is the key when you embrace digital.
The retailers are at least five years ahead of us, and we have to catch up.
How has Lufthansa modified and retrofitted its cabins with all the new technology for entertainment, connectivity etc?
RS: We have invested heavily in the hardware used in the cabins. All our planes are retrofitted. We are doing this not just for the long-haul flights but also for flights within a continent. Connectivity is extremely important for the passenger, even on the short-haul flights. It (Internet access) will become a hygiene factor in the future as it has become in the hotel industry. The entertainment content needs to be interactive. It needs to be something more than just curated content that’s pre-loaded (on disk).
To offer a seamless experience it (access) should not be differentiated between on-ground and in- flight. And that requires connectivity. We are in the last stage of a tender and working with major providers to offer satellite-based connectivity. These new connectivity services will be introduced next year.
We work with location-based services especially Mobility is important because 60 percent of our customers connect to us through smart phones. Pilot trials are being conducted in Munich and Frankfurt. For instance, the passenger is informed about a gate change, and will be guided through a terminal. It’s important to give information at the right moment, at the right location and in the right context.
Taking this to another level, we could monitor the stress level of a passenger throughout the journey and offer a more comfortable experience.
Currently, we are creating a customer profile where all details about a customer are collected and made accessible to all applications.
We are also investing in analytics and mobility. Analytics is important to help us understand our customer.
But we are also careful on what details we collect about our customers and respect their privacy. We also abide with the strict German laws and regulations, with regard to privacy. So we need to balance it out.
How is IBM supporting you on the infrastructure side?
IBM is doing all of the IT infrastructure legacy. All our data centres, wide area networks, and office equipment will be managed by IBM. They have also been managing the Lufthansa website for many years, and this is the third largest website in Germany (hits and revenue); we are doing Euro 1.5 bn in revenue through this website. Of course, the share of direct business in the US market is much larger, where business is still dominated by the traditional travel agencies, which are 70 – 80 percent of the market.
But our main aim is to reduce the number of IT providers – we are currently dependent on 300 IT providers, who have specific expertise in our domain.