Why Lufthansa Errs

Lufthansa is a good airline. Lufthansa provides solid service, the technical level of the aircrafts is high, the crews are well trained and educated – no need to complain.

Lufthansa is always aiming for profit. There’s nothing bad about it, we would advise them to do so, and this profit mentality is one reason why Lufthansa recently stopped its engagement in British airline BMI which was a smart step since Lufthansa didn’t manage to integrate BMI properly – for various reasons.

However, since prices for air transportation are consistently under pressure, Lufthansa now introduced something that I call at least “dangerous.“ The Lufthansa group (Lufthansa, Austrian Airlines, Brussels Airlines, and Swiss) charges passengers who book and pay with a credit card an „Optional Payment Charge (OPC)“: Five up to 18 Euro are being added to the bill if the passenger chooses to pay with a credit card – even if it is a Lufthansa credit card.

This is not just ridiculous, it is dangerous for the brand, because it shows that the brand “Lufthansa“ doesn’t seem to be strong enough to generate more profit from the core business. Unbundling is fine as long as we are talking about unbundling core services. Adding a fee for a common process, like paying with a credit card is one, is just an indicator for helplessness.

Ladies and Gentlemen at Lufthansa: This doesn’t work. Even if you are adding a few Euro to the bottom line that way, even if other airlines will follow this bad practice, even if your shareholders will honor the increased profitability: This is shortsighted and it shows that you apparently need some really good ideas to grow.

You cannot grow by fooling your customer. You sure can grow by increasing the attractiveness of your brand. If you need some ideas how to do that, ask Singapore Airlines. And before you call them, why don’t you have a look at the awards, Singapore Airlines won month after month over the last couple of years being the most awarded airline. Do you get the idea?

Guido Quelle

(c) 2011, Prof. Dr. Guido Quelle, Mandat Managementberatung GmbH