In an interview, Lufthansa officials tell why Pune’s lack of airport costs not only domestic but also international carriers and why airline's premium pricing is relevant.
German premium carrier Lufthansa is eyeing Hyderabad as a potential flight destination to add to its network while consolidating its current market. The airline also wants to operate flights to and from Pune, but can’t do so for now as the city doesn’t have an airport to service large aircraft. In an interview, Alexander Schlaubitz, Vice President, Marketing; and George Ettiyil, Senior Director, Sales, talk to Financial Express Online about why Lufthansa’s premium pricing is relevant for India, what Lufthansa expects from the rising competition from domestic carriers like IndiGo and SpiceJet and why Pune’s lack of airport costs not only domestic but also international carriers. An edited excerpt of Alexander Schlaubitz and George Ettiyil’s interview with Prachi Gupta.
In a price-sensitive market like India, how does Lufthansa fare by being a brand on the premium end? Is it a sore point for customers who may not be willing to shell more money?
Alexander Schlaubitz: India has an incredible traveller base and the base is becoming more diversified. The customers are very price-conscious but they are also very discerning. They know what they want from an airline and in those respects, we find the premium positioning to be quite relevant. But we also serve very competitive prices; these prices are very competitive in the marketplace.
George Ettiyil: A decade ago, I would have completely agreed with the view that Indian customers are price sensitive. Now, there is a growing section of travellers who have purchasing power and who are also willing to spend for the little extra that differentiates us from other very good brands. Indian consumers now have the purchasing power that compels them to pick a brand like Lufthansa.
What kind of potential do you see in India market?
Alexander Schlaubitz: From a global perspective, India is on a trajectory to become one of the top three travel markets, within a few years. There is an awful lot of velocity here and there is an increase in sophistication among traveller which is something that is very important to us. As travellers become more discerning, we position ourselves as a premium carrier in both a quantitative and qualitative perspective. This is a great market for us.
Many domestic carriers like IndiGo, Vistara and SpiceJet are expanding into international skies. What kind of impact do you think will they have on international carriers like Lufthansa?
George Ettiyil: Competition is always good. It kind of keeps us focused on our customers. I think competition will actually help us in understanding Indian customers even better. We hope for a healthy competition out of the Indian market.
Any destinations that you believe are underserved for now but hold potential. Any destinations where you’d like to expand?
George Ettiyil: We’ve been trying to consolidate the network that we have; we are trying to increase our presence in the places we fly to because as an airline, one needs to grow prudently. If you don’t do it prudently, you may end up not being successful. We have plenty of examples in that space. Uncontrolled growth is not wise for an airline to do. So, we are consolidating Bombay, Delhi, Bangalore, and Chennai definitely, is on the agenda.
But we also look at Hyderabad as a potential place which could be there on the network in the future. Pune has a very potential market but we lack an airport over there. Pune not having an airport is a loss to airlines, for international carriers that cannot fly to Pune with a widebody aircraft and it is a big loss for the region around Pune and Pune itself.
Is there any particular number that you are targeting in terms of revenue from the Indian market?
George Ettiyil: We are expecting a lower double-digit growth and the stress is more on the double-digit than lower. India is definitely going to grow as an aviation market but first growth will be domestic and then it will be in the surrounding international markets like the Middle East and Asia. There is also going to be significant growth in our west-bound traffic. We do see something in the range of 10-12%.
What is the market share that India holds for the company?
George Ettiyil: A carrier is always going to be dominant in its home market. Every flight starts and ends at the home market. So, 50% of the share immediate goes from Germany, Switzerland, Austria by the fact of figures. The remaining 50% of the traffic, out of that India holds around 8-10% of the share.
What is Lufthansa’s campaign with National Geographic?
Alexander Schlaubitz: We were looking for ways to embed The “Life-changing places” campaign deeply into India. We found National Geographic to be a fantastic partner because they were very aligned in the vision that they have of travel and also very much of a premium brand. So, it helps us to combine those two narratives and create an even larger conversation around travel and meaningful travel in particular.
How is catering to Indian consumers different for Lufthansa?
Alexander Schlaubitz: India, in many ways, was the first movers in terms of arc approach to localising the brand. We started five or six years ago in changing the catering. We added more Indian crew and entertainment options and enhancing them with local films. We found that out to be a very important aspect for Indian travellers. Food is also very important. So, once we made that change, we also were able to tell a different story. We try to recruit a local crew. It is not all Delhi based crew, we know that there are regional differences. So we make sure it is really as authentic as possible. We need to keep upping our game.
And how do you plan to keep upping your game?
Alexander Schlaubitz: From a campaign perspective, we are trying to offer is more inspiration to do things that we think qualify as immersive travel and giving them an opportunity to perhaps get off the beaten path.
Are customers opening up to offbeat destinations?
Alexander Schlaubitz: Yes. We are finding it to be a global trend. Once you have done your first trip to the Eiffel Tower or London Bridge, your second trip tends less to be predictable kind.