We calculated risks and believed in the Ukrainian market of wide opportunities

Rene Koinzack, the General Manager of Lufthansa Group in Ukraine, told LDaily about the development, innovations which are going to appear in Ukraine and the specifics of the Ukrainian market in the experience of one of the largest air carriers in the world.

The development of IT solutions, as well as the latest technology in general, is one of the main factors – or even the main factor – of impact on all types of business.

Aviation and air transportation are among the leaders of change, as this is one of the most technologically rich industries. Even passengers who are not deeply involved in the business processes see the development of low-cost transportation. We use online registration for flights, buy tickets online and read the press on board from own gadgets or from screens mounted in the back of every sit.

After the global economic crisis of 2008, which, according to IATA Director General Giovanni Bisignani, “was worthy of two years of growth to the industry”, airlines are constantly introducing many innovations allowing them to reduce costs and maintain marginal revenue at the desired level. As passengers, we see the structuring of airfare in the form of basic fare and various surcharges to it. This happens even in airlines with a great history and a powerful brand, not only in low-cost carriers (although low-costers were the first to start this game). We, the airlines’ customers, are now “constructing” our own tariffs by choosing the services we need during the online ticket reservation using a user-friendly menu. The same will to reduce fuel consumption, along with the development of digital solutions, has made it possible for airlines to reduce printed press on board. This reduced the luggage weight; however, passengers are not left without reading. All the press – and even a wider range – along with music, movies and games is stored on the onboard server. Airlines offer access to this information through the aircraft’s internal Wi-Fi network.

The electric range development opens up even more possibilities. There are already aircrafts with electric motors. Electric aviation seems to become widely used in the nearest future, at least in the business segment.

What are the interesting and useful lessons from this? How should we use new opportunities and experience of airlines in other industries? Let’s consider an interesting experience.

Lufthansa Group which includes more than 550 affiliated companies created the Lufthansa Innovation Hub in January 2014, which has substantially expanded its scope since then. From the initial focus on consumer experience, a hub in Berlin has expanded to the B2B segment, as the travel market is constantly changing. According to the Managing Director Gleb Tritus, the first and foremost task of the hub was “to become an important part of Lufthansa Group, which shapes the digital future of the whole organization”.

“We are neither an incubator nor an accelerator, nor a research company,” Lufthansa Group stated on the Innovation Hub website. – We are responsible for tracking business opportunities which arise at the intersection of the Lufthansa Group activities and the world-wide technology-driven travel market.

Our job is to quickly identify and analyze such opportunities and convert them into new businesses for Lufthansa. We are entrepreneurs, start-up experts, venture capitalists, service developers, market and trend analytics, and other Lufthansa employees who apply their entrepreneurial skills and spirit to develop creative and business-oriented concepts for Lufthansa Group”.

LDaily: How does Lufthansa acquire customers in Ukraine considering the competition in the modern transport market?

R. Koinzack: As Lufthansa Group, we are proud to offer services to Ukraine for already 28 years. We have the base of loyal customers, which is constantly growing, as our customers appreciate high-quality services we offer not only as Lufthansa German Airlines but also together with Austrian Airlines, SWISS, and Brussels Airlines. Furthermore, we have had a long-term commitment to Ukraine – to Kyiv, Dnipro, Odessa, and Lviv for many years. This helps us be close to our customers and react to their needs.

Despite our very attractive flight offer with almost 100 flights per week from Ukraine to our hubs in Munich, Frankfurt, Vienna, Zurich, and Brussels, which we provide to our Ukrainian customers, we also offer them attractive fares.

Finally yet importantly, we have a very modern approach in sales and try to serve our customers not only through our own online sales channels. We also closely cooperate with Ukrainian travel agencies and corporates to create attractive offers for our customers.

For corporates, we have, for example, PartnerPlusBenefit which is a corporate benefits program with special fares.

LDaily: Why are there two low-cost airlines in the group – Eurowings and Germanwings?

R. Koinzack: Technically, they belong to one airline – Eurowings. Germanwings was the predecessor of Eurowings. For legal reasons, we still have a few flights operated by Germanwings, but these flights will be all steadily moved to Eurowings which is the main brand. By the way, Brussels Airlines is also part of the Eurowings Group, which has been operating in Ukraine since October 2018.

LDaily: So, these companies help you compete.

R. Koinzack: Yes, the Eurowings Group supports us within our overall Lufthansa Group strategy. Lufthansa, Austrian and SWISS represent our premium airlines. Via our hubs in Vienna, Zurich, Munich, and Frankfurt, we offer flights to more than 340 destinations worldwide in First Class, (Lufthansa & SWISS only), Business Class, Premium Economy (Austrian & Lufthansa only) and Economy Class. With Eurowings, we focus on the Point-to-Point traffic, for example, flights from Dusseldorf to Berlin.

LDaily: What is the fundamental point of Lufthansa services offered to your customers?

R. Koinzack: I think the best point is our people, our employees who are very dedicated and deliver very good services to our customers. We received a 5-star certification from Skytrax last year. We were the first airline outside Asia and the only one in Europe with the recognition of our major efforts to make Lufthansa one of the world’s leading premium airlines with successful products.

Lufthansa Group is one of the World’s leading aviation groups with five airline brands and other service companies.

We constantly invest in improving our services whether this is onboard or the service before or after flights. For example, our customers can download newspapers and magazines they would like to read during the flight before the flight for free.

Lufthansa Group continues investing in innovation, digitalization & modernization. Since 2017, Lufthansa Group has invested 500 million EUR in digitalization and will continue this activity this until 2020. This includes many internal and external projects of improved and personalized services. Our Josie Pepper humanoid robot at Munich airport is one of the examples. It answers questions for customers at Terminal 2 and is very popular. FlyNet (Wi-Fi onboard) was another digital project completed in 2018. This project just started last year and you now can access our FlyNet on all A320 family flights in Europe. On top of that, FlyNet is available on all long-haul routes.

What’s more, we not only modernize our brand, we also improve our aircraft to increase customer comfort, for the environment, for the efficiency – there are many reasons to use modern aircraft.

LDaily: How risky is the Ukrainian market for your company and which kind of risks have you faced?

R. Koinzack: We took an opportunity 28 years ago, as we believed in the Ukrainian market and saw that this market offers a lot of opportunities. The biggest risk relates to changing economic development, but we have this in every country where the economy is volatile. We are now taking risk of increasing our capacities (for example, we are offering by 20% more seats in 2019).

LDaily: How does Lufthansa work with the media – newspapers or magazines? We know that passengers read something during the flight. How does it change the attitude to the media market?

R. Koinzack: As mentioned above, we don’t offer any physical newspapers or magazines onboard anymore. However, our customers can download newspapers or magazines for free after they check in online. This means that they have a much wider choice, and we are able to offer magazines in different languages, for example, we have local newspapers from China.

LDaily: How have Ukrainian companies changed over the last five years?

R. Koinzack: In my personal opinion, I see a lot of dynamics and innovation. As a result, for example, we have stopped our own offline sales, as we believe our local trade partners offer this kind of service in a better way while we focus on online sales.

LDaily: What are your plans for the next five years?

R. Koinzack: First of all, Ukraine is ready for big investments. Last year, we introduced Swiss airlines to the market, offered more flights to Frankfurt from Kyiv and increased our services from Odessa and Lviv. All in all, there was an increase of around 14% of the seats.

This is very important for us to optimize our offers in the next five years. If we see opportunities, we will increase our offers further.

LDaily: Have you noticed the increase in the number of flights after the visa cancelation during the last few years?

R. Koinzack: We noticed two interesting trends after the visa cancelation. Firstly, after a transition phase, more Ukrainians started to travel to Europe; still, they also slowly changed their buying behavior. I mean that our customers now buy tickets earlier, as they don’t have to go through the visa process.

The other fact is that waiving the visa requirement created a positive image for Ukraine, as many people in Europe recognized they don’t need visas as well.