Dubai will remain top destination for Lufthansa

Dubai: Europe's second biggest airline group continues to pursue new projects throughout the Middle East as the global crisis that also hit the aviation market seems to be bottoming out.

The Middle East, especially the UAE, a significant airline hub in the region, is one of the main areas where Lufthansa is stepping up flights and seat capacity, Thierry Antinori, member of the Lufthansa German Airlines board, responsible for Marketing and Distribution, told Gulf News in an interview.

While the market declined as a result of the fallout of the economic crisis earlier this year, Lufthansa managed to increase the number of passengers to the region by 12-13 per cent, he added.

"It is our target to hold our increased market share even after the crisis abates. There are signals that the market is on the way to recovery, and we are confident that Dubai will retain its role as a top destination for both corporate travel and tourism traffic," Antinori said.

Earnings

However, earnings have been under pressure since the crisis struck, Antinori admitted.

"Industry-wide, the pressure on average ticket fares remains high and our revenues could not keep pace with the passenger growth as a consequence. We also had to revert to more aggressive pricing in order to stimulate demand and at the same time we also noted that fewer customers are travelling in first and business class, as companies revised their corporate travel policies to cut expenses."

The Lufthansa Group, which is present in the Middle East with Lufthansa, Swiss, Austrian Airlines and BMI, currently serves ten destinations in the GCC and 16 in the Middle East altogether.

While a number of destinations are served by more than one of the group's airlines, they largely offer complementary services via their respective hubs in Frankfurt, Munich, Zurich, Vienna and London.

According to Antinori, there may be selective schedule adjustments as the integration proceeds, but no across-the-board cut-backs were to be expected.

"Lufthansa does not invest in other airlines in order to shrink them. Our goal is to offer our customers the most comprehensive and flexible travel options," Antinori said.

"As a group, together with Austrian, Swiss and BMI, we are even getting more competitive because of the density of our network and our reputation to be reliable and to offer quality travel."

Low-cost competition

The rise of discount airlines in the GCC is "taken seriously" by Lufthansa. "We are watching the development closely," said Antinori.

"But those no-frills airlines are more of a direct threat to local GCC carriers on short-haul routes, as for example Royal Jordanian, Egyptair or Turkish Airlines. From our point of view, the no-frills carriers are attracting new customers to air travel, too. This grows the market and sooner or later some of these new customers will chose to upgrade on one of their trips."

One of the problem areas — not only for Lufthansa — remains the shrinking demand for first and business class travel. Occupancy in those classes came down 29 per cent since the crisis began, and Lufthansa counteracted this trend with flexibility on the pricing side.

"But we are certainly not going to sell those seats off," Antinori said.

Lufthansa, which will introduce its own new first class in 2010, does not believe in the long-term viability of extravagant, and sometimes even desperate, product upgrades, launched by some carriers in order to attract more premium passengers and improve margins.

"Lufthansa offers its customers an attractive product and a consistently high service quality at all of the customer touch points throughout the journey. We intend to provide a well balanced travel experience, which should be economically viable and sustainable over time," Antinori said.

Talking of Dubai as a major trade and travel hub in the Middle East, Antinori said he was confident that economic sentiment is improving again.

"Dubai has achieved incredible results during 2000-2007, and even now I don't worry about the potency of its economic footing. The pace of business may be more moderate in the foreseeable future, but we expect the region to return to noticeable growth from 2010 onwards."

Crucial position held for a decade

Thierry Antinori, 48, was appointed member of the airline board of Lufthansa German Airlines on January 1, 2000. In this position he is responsible for Lufthansa's global sales and marketing organisation, as well as for pricing and product management.

Lufthansa's Middle East headquarters are situated in Dubai, headed by Joachim Steinbach, Vice President Sales and Services Southeast Europe, Africa, Middle East and Pakistan.