Lufthansa – Incentives & Pricing Strategies
LUFTHANSA – SHORT RUN INCENTIVES AND PRICING STRATEGIES
COMPANY OVERVIEW
Lufthansa is the flagship carrier of Germany and the world's fourth-largest airline in terms of overall passengers carried. It operates services in 18 domestic destinations in Germany, 197 international destinations, and in 78 countries across Africa, the Americas, Asia, and Europe. With over 870 aircraft, it has the largest passenger airline fleet in the world when combined with its subsidiaries.
The brand is strong and highly respected especially in Germany and Europe, with unaided brand awareness in the high 90s in most European markets. The company is regularly voted to be one of the most attractive employers in Germany. The current brand image reflects that Lufthansa is considered to be a high-quality, very safe, and professional airline but is also an expensive solution primarily aimed towards corporate travelers.
So it should be no surprise that Lufthansa’s most important revenue generator always was and still is the corporate business. Lufthansa operates the most First and Business Class seats worldwide (on average 65 and up to 98 Business Class seats on the A380 fleet). The share of corporate customers is said to be the highest in the industry. This is important, as an average corporate ticket results in 2.5 times higher revenues than an average private ticket.
PROBLEM IDENTIFICATION
Keeping up with average industry growth rates is essential in order to constantly lower unit costs and stay competitive in the market. As nearly all industry growth comes from the price-sensitive, private segment (corporate segments are relatively stable), this can only be achieved by attracting more private or individual leisure travelers.
For many years, Lufthansa has already been advertising low prices in order to change the image of being “too expensive for private travelers”. While, in fact, this image was true in the 90s, it does not reflect reality anymore. Lufthansa’s all-in
COMPANY OVERVIEW
Lufthansa is the flagship carrier of Germany and the world's fourth-largest airline in terms of overall passengers carried. It operates services in 18 domestic destinations in Germany, 197 international destinations, and in 78 countries across Africa, the Americas, Asia, and Europe. With over 870 aircraft, it has the largest passenger airline fleet in the world when combined with its subsidiaries.
The brand is strong and highly respected especially in Germany and Europe, with unaided brand awareness in the high 90s in most European markets. The company is regularly voted to be one of the most attractive employers in Germany. The current brand image reflects that Lufthansa is considered to be a high-quality, very safe, and professional airline but is also an expensive solution primarily aimed towards corporate travelers.
So it should be no surprise that Lufthansa’s most important revenue generator always was and still is the corporate business. Lufthansa operates the most First and Business Class seats worldwide (on average 65 and up to 98 Business Class seats on the A380 fleet). The share of corporate customers is said to be the highest in the industry. This is important, as an average corporate ticket results in 2.5 times higher revenues than an average private ticket.
PROBLEM IDENTIFICATION
Keeping up with average industry growth rates is essential in order to constantly lower unit costs and stay competitive in the market. As nearly all industry growth comes from the price-sensitive, private segment (corporate segments are relatively stable), this can only be achieved by attracting more private or individual leisure travelers.
For many years, Lufthansa has already been advertising low prices in order to change the image of being “too expensive for private travelers”. While, in fact, this image was true in the 90s, it does not reflect reality anymore. Lufthansa’s all-in