Lufthansa Airlines: Competitive Positioning and Future Strategies

This report provides an analysis of Lufthansa Airlines' market positioning and strategies for gaining a competitive advantage in the airline industry. It discusses various factors influencing Lufthansa's position, including supply chain management, pricing strategies, brand value, and marketing efforts. The report highlights Lufthansa's responses to challenges, such as strikes and high prices, through marketing campaigns, wage deals, and partnerships. It also examines Lufthansa's strategies for maintaining its position, such as investing in fleet services, digital offerings, and customer service improvements. Furthermore, the report suggests measures for future success, including enhancing customer services, focusing on customer needs, and implementing advanced digital technologies. The analysis emphasizes Lufthansa's efforts to differentiate itself from competitors and maintain a superior position in the market through quality services and customer satisfaction.

LUFTHANSA AIRLINES

TABLE OF CONTENTS
Introduction......................................................................................................................................1
Discussion on Lufthansa Airlines....................................................................................................2
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

LIST OF FIGURES
Figure 1: Factors affecting position of Lufthansa in market...........................................................4
Figure 2: Top 10 Airlines ranked by seats.......................................................................................7

Introduction
Lufthansa Airlines operates as the largest airline under Star Alliance in Germany in terms of its
passenger carrying capacity as well as the fleet size. It owns many other subsidiaries of
passenger airlines including Austrian Airlines, Brussels Airlines, Euro wings and Swiss
International Airlines. It provides services to business men, upper and middle class as well as to
the leisure travellers. Lufthansa serves number of international destinations in approximately 80
countries. It also focus on providing exclusive services to its customers that includes flyer
programs, different class services, lounges and many more.
Report will identify it’s positioning in the market that helps in gaining competitive advantage.
Various competitive positions that includes supply chain, pricing, marketing, HR, brand values,
etc. will be discussed in this report.
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Discussion on Lufthansa Airlines
Lufthansa Airlines operates in the airline industry and provides various IT services such as
maintenance, food and meal services, etc. It employees more than 100,000 of employees that
provides various services according to the needs of customers. It focuses on building the strong
brand image by implementing various marketing and promotional measures. In addition to its
passenger airlines, Lufthansa also provides services in logistics and cargo sector. According to
its performance in traffic, it is ranked at third position in passenger transport.
There are various threats to Lufthansa Airlines that majorly includes geopolitical development as
well as various fluctuations in economy. Lufthansa operates its business internationally and
therefore, it is influenced highly by risks in capital markets. Profitability also reduces with the
increase in fuel prices that highly affects the operating expenses. There are many other risks
related to infrastructure which plays an important role in gaining long term competitiveness in
the market. Along with all these threats, the one of the major threats is its competitors which
offer lower price services in the market.
Therefore to differentiate it from other airlines as well as to position strongly in market, various
elements related to Lufthansa Airlines are discussed below:
Supply Chain: Supply chain management can be defined the process that involves activities of
bringing raw material, production, and distribution of final product to its customers (Christopher,
2016). Airline Industry highly relies on customers for its growth. Lufthansa focus on enhancing
the customer services by implementing efficient supply chain management. It provides high
quality of goods and services to its customers which help in gaining competitive advantage in the
airline industry. It provides high quality of meals and other services on right time and at
affordable prices.
It also stocks various equipments for its future maintenance which reduces its maintenance cost,
as well as help in delivering high level of services. Its effective supply chain management
includes planning for predicting the needs of customer, capacity management, as well as engine
maintenance and many more. Therefore efficient management of inventory, as well as
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scheduling of operations related to maintenance helps to position Lufthansa at a high place in
aviation industry.
Pricing: Lufthansa focuses on developing pricing strategies for gaining competitive advantage in
the market (Patrick, 2016). The prices of air fare includes base fare, various takes at airport, fuel
charges, food and meal charges, as well as baggage charges. Prices in airlines change due to the
availability of seats and demand of customers. Lufthansa increases the price at the time of festive
seasons. Airlines keep on changing prices to gain competitive advantage in the market.
Brand Value: The major challenges faced by Airline were brand recognition when services were
provided at high prices. The brand value was lost by Lufthansa because of continuous strikes of
its employees and other crew which result into delaying of flights more often (Brand Value
Analysis, 2018). Strikes were against the low cost prices offered to its customers to gain
competitive advantage in the market. It then partnered with Global Advertising strategies to
maintain the position in the market to fulfil the needs of customers. It also focuses on creating
and implementing various campaigns and marketing strategies to cover up its brand name in the
market.
Marketing: Lufthansa focus on providing training to its employees so that they can provide
efficient services to its customers. This was the main strategy of marketing managers working in
airlines. It launches advanced seat reservation system that allows the customers to even change
the seat at the time of long travelling (Armstrong et.al.2015). Lufthansa also partnered with small
agencies that help in resolving the issues of customers. These features highly attract the
customers to travel with the Lufthansa airline. It also launched new airline campaign that creates
a new Selfie Ad Unit that helps travellers to click pictures using their own smart phone and helps
them to share that envelope preview on social media. This helps to promote the campaign on
social media via mobile.
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Figure 1: Factors affecting position of Lufthansa in market
Response of Lufthansa according to the above mentioned factors to gain competitive
advantage in the market
Lufthansa have developed various strategies to re invent its brand name in the aviation sector. Its
brand name degrades because of various strikes by its crew members and suffered a lot mainly at
the time of festive seasons. For overcoming the threats related to its brand value, Lufthansa
focused on various marketing strategies by developing and implementing campaigns. To resolve
the issues of trade unions, it signed a ‘wage deal’ with its crew members. In this a pay will be
increased by 6% in the year 2018 and 2019 (Stabile, 2016). The increment in the year 2019
depends on the profit earned by the businesses at the end of the year.
The issues related to high prices brings downfall in its brand image. For resolving the issue, it
partnered with Global Advertising Strategies for its position in competitive market (Giselle,
2018). Global Advertising Strategies offers a wide portfolio that emphasise on providing digital
positioning of brand. It also launches the online booking portal ‘We Fly Home’ that offers
various discounts on selected countries. To gain competitive advantage in the market, it reduces
its profit margins and provides high quality of services.
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Position
in
Market
Supply
Chain
Pricing
Brand
value
Marketing

It also focuses on providing entertainment services to its customers travelling in first and
business class. It offers films in different languages, TV programmes, as well as different types
of magazines that highly attract the customers (Lim et.al.2016).
Lufthansa faces various challenges related to cost, price, destination and many more that are
overcome by developing various strategies. It focuses on implementing various safety measures
and updates the techniques from time to time to ensure the safety and security of its customers.
It hires and trains the employees to maintain the surroundings of airport and airplanes that helps
in flourishing the minds of customers.
At the time of recession, organization implements innovative ideas to reduce the economic
problems (Levi, 2015). It focuses on implementing strategic programme that increases the
centricity of customers, growth concept, digitization and innovation, leadership, as well as
constant efficiency. It recently developed 3 pillar strategies which depend on Point to Point
Airlines, Aviation Services and Network Airlines. These all together helps in scaling up the
business economy.
There are many other factors due to which it stands at superior position in the market. It offers
high level of consulting services which ensures the quality of products and services. This was
done by timely training to its employees so that they can implement their innovation to fulfil the
needs of customers. Training also helps to gain detail knowledge of the product which can be
used to explain to its customers.
Customers are the key assets of an airline industry therefore; it takes various measures to
improve the customer satisfaction. It takes various steps to improve the processes to satisfy the
customers. It also focuses on interacting with its customers and help to resolve their service
related issues. They promote new ideologies to welcome the customers which is the most
attractive way that ensures the re booking of flights. The above mentioned factors differentiate it
from the other airlines that help in gaining competitive advantage in the market.
There are many other products and services that help Lufthansa to position it in the competitive
world which is as follows:
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 Language Guide: It offers guide books to its international traveller as well as to its
business, groups and other passengers in 50 different languages. It helps to give
information to travellers about their connecting flights (Doll, 2015).
 Family Services: These are beneficial for the people who find check in and check outs
difficult. Crew people assist them with help and accompany them till the end.
Position of Lufthansa airlines in recent years
Lufthansa has managed to overcome the threats to a great extent by developing innovative ideas
and strategies. It has made large investments in fleet services, introduction of digital services and
products, renovation of crew cabins, introduction of new lounges, as well as various
improvements in ground and on air services. It also focuses on its other segments on secondary
brand i.e. Euro wings which offer cheaper flights. It now operates as 5 Star Airlines by
providing quality services at low prices (O’Connell and Connolly, 2017).
Various airlines provide comfortable seats and planes, but Lufthansa has gained a position in the
market because it provides comfort throughout the journey. This is achieved with the help of
their highly skilled staff and crew members. Therefore, to gain the position in market, they
trained their employees through various training and development programs.
It fulfils all the conditions to become a five star airline which has major focus on providing
customer satisfaction. It fulfils the conditions by providing quality services from booking to
landing on both long and short haul routes.
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Figure 2: Top 10 Airlines ranked by seats
Measures to succeed in future in airline sector
Lufthansa has succeeded in growing but still need to take various measures to maintain its
position in market. It must focus on enhancing the services and provides more products to the
customers that differentiate it from other airlines. It must provide more customised food products
to fulfil the needs of customers for first to business class customers especially for the long haul
travelling. It also must focus on its customers rather than its competitors. Lufthansa must not
copy the offerings from its competitors as this will let down the brand name in the market. For
improving the quality of products and services, Lufthansa must identify the solutions for the
problems of customers by identifying the feedbacks. It must find solutions according to the
feedbacks and reviews of customers (Cai and Chi, 2018). Crew must ensure the perfect offering
of product to its travellers.
They must aim to provide what is actually needed by customers. Customers rely on the staff
members to assist them in their entire journey and therefore they must appoint more number of
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employees to serve the needs of employees in the most efficient way. Employees must get
personal attention so that in future also they make plan to travel by same airlines. Lufthansa must
also manage to keep past record of all the employees so that at the time of discounts and offers,
they can send notifications to all its customers. Customers must be aware about their current
offerings of products and services so that they can approach accordingly in case if customers are
planning to travel.
The most important factor of the growth is digitisation. In the coming 2-5 year’s people will rely
completely on technology for planning their holidays (Kikkawa and Mavin, 2018). Therefore,
Lufthansa must implement advanced digital technologies in future for enhancing the customer
satisfaction. They must provide customised services according to the individual customers.
Digitisation will help to develop new solutions to existing products as well as new models
related to businesses. This will prove to be an added value to its customers by assisting them in
knowing the current status and location of flights without any manual enquiry.
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Conclusion
By studying the report, it can be concluded that airline industry suffers from lots of threats due to
several reasons. The threats may be defined in terms of its competitors, high prices, low quality
services, technology, trade unions and many more. Therefore Lufthansa Airlines focus on
implementing various measures to improve its brand name which was degraded because of
above explained issues. Brand Value and effective pricing strategies along with the other factors
such as safety of customers, cleanliness and many others help to gain higher position in the
aviation industry.
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