Lufthansa UK and Ireland general manager Marianne Sammann talks to Ian Taylor about the business outlook in the UK, trouble at Heathrow and agent booking fees
Lufthansa is among a handful of airlines that can afford to relax about its immediate prospects, having reported annual profits of €1.7 billion in March and a strong performance in the first quarter.
The German airline and its Zurich-based subsidiary Swiss, acquired in 2005, carried 3.5 million passengers to and from the UK and Ireland last year.
A programme of expansion saw Lufthansa return to Bristol this spring with three daily flights to Frankfurt, adding to services from Edinburgh, Newcastle, Manchester, Birmingham and London City as well as Heathrow.
News that two-thirds of the airline’s UK sales are booked through global distribution systems will please agents, but a plan from next month to make German agents pay a fee to sell Lufthansa flights may not.
Lufthansa announced record profits last year. Is demand holding up and can you compete with low-cost rivals?
We are going well in the UK, adding flights. Business was very good at the start of the year. Capacity from the UK was up 8% and sales 9.5%.
The strong demand is interesting in light of all that is said about the economy. Business travel has been the strongest sector, perhaps because only a tenth of our corporate travel is from the financial sector.
The price of oil and the economic situation will have implications for travel, but there is an underlying demand. In a crisis, it is important for business travellers to be out
and about.
Passengers are looking for reliable suppliers. We can beat Ryanair with a £39 fare and include a smile from the crew, check in a bag for free and offer a free sandwich and drink. If you book Ryanair you tailor your plans to the flight. But we offer options, for example if a business passenger needs to re-book.
You have expanded substantially from regional airports. Why?
Passengers increasingly want to fly from regional airports and we see more growth from regional airports than from Heathrow.
Bristol completes the picture for us. The business travel community in Bristol wanted a full-service carrier at the airport and we responded.
We believe about 25% of passengers from Bristol will connect with flights to elsewhere in Germany, about 17% will stay in Frankfurt and the majority connect to services around Europe.
Frankfurt and Munich offer a much better service as connecting hubs than Heathrow does.
If someone is flying to the US it may seem surprising to go to Continental Europe. But why drive to Heathrow and face the cost of parking when you can check in and check your bag through to your destination at Bristol? A short feeder flight also gives you some slack time.
We have also made a huge investment in London City, almost doubling capacity to Frankfurt and starting a Berlin service. We serve all our main hubs from there. Major corporate customers love the connections and pressed us for more.
- See Travel Weekly’s recent feature on the growth of regional airports.
How big a concern is Heathrow, given the recent problems, rising charges and delay to Lufthansa’s move of terminals?
We will move from Terminal 2 to Terminal 1 when British Airways completes its move to Terminal 5. It will be a huge improvement.
It will be interesting to see how passengers take to Terminal 5, where many will be taken to their aircraft by bus. At Terminal 1 everything will be possible via the gates. That is a huge advantage.
We expect to implement the move in an acceptable time frame. I am not concerned about it. We have worked with [Heathrow operator] BAA for a long time to prepare for the transition and will make sure we get it right.
In Terminal 1 there will be more space to breathe and less stress at security. Our Star Alliance partners will all be in that terminal and access to check-in and lounges will improve.
Heathrow is very popular. Passengers want to fly from it – if they did not, there would not be a problem. But we don’t want delays. The limitations are bad for business.
Airport price increases need to be reflected in service. It is difficult to argue we have had an improvement in service at Heathrow that justifies a rise in charges. So we are concerned.
Lufthansa acquired Swiss three years ago, but the airlines appear to be separate and have two UK sales teams. Are you two airlines or one?
We operate like two restaurants with a single kitchen. Swiss and Lufthansa share an office in the UK.
We have two excellent brands and three main hubs. The arrangement involves a lot of dialogue and co-operation, but the co-operation generates revenue.
Does Lufthansa support plans for a European emissions-trading scheme and other initiatives to tackle airlines’ contribution to climate change?
Most airlines take the issue seriously. Emissions must go down over time. But we see more and more demand for air travel as part of the global development of the economy and we should not be telling people not to travel. It is for us to organise travel in a sustainable way.
We have launched a sustainable programme, evaluating operations and organising in a more responsible way, modernising the fleet, cutting our average fuel consumption, supporting research.
We have co-operated with [German rail operator] Deutsche Bahn for many years and have an air-rail service in Germany. For example, we do not fly between Frankfurt and Cologne – the train is the only option.
Our priority is to be sustainable. But aviation requires a global perspective. We need a worldwide emissions trading scheme and there is a lot of work to be done.
Can you explain the booking fee Lufthansa will introduce in Switzerland, Germany and Austria in July?
From July 1 all fares in Germany go up €30 per round trip. But the old fares will still be available through lufthansa.com and to all agents who have signed a preferred fares agreement – about 80% of the trade in Germany have done so.
These fares will carry a fee of €4.90 per coupon. The fee is based on the cost [to us] of the global distribution system. But the fee is zero via Sabre [and now Travelport] for those with a preferred fares agreement.
The scheme was announced in January. It was not designed to charge more than the GDSs charge, but the cost of using a GDS has gone up 3%-5% a year for a decade and the model is designed to bring down the costs for us.
There has been a heated reaction, but we have no plans to extend the scheme. It is about driving down costs in Germany.
Profile
- Lives: London
- Status: Married with three grown-up children
- Born: Klagenfurt, Austria
- Background: A diplomat’s daughter, Sammann grew up travelling around the world.
- Interests: Travel, theatre, music, outdoor activities
Employment history
- 1979: Joined Lufthansa, rising to become head of global corporate business in Frankfurt
- February 2007: Moved to London as UK and Ireland general manager
