As European Airlines Struggle, Lufthansa Banks on CX, Says CEO of InTouch
Fare wars and seat surpluses have suppressed profits for European carriers
Despite troubled times in European air travel, German airline Lufthansa is redoubling its commitment to the customer experience to outrank competitors in what has devolved into an expensive fare war between the region’s low-cost carriers and premium airliners.
European airlines are struggling to turn a profit due to a surplus of seats on tourist and business routes – too many planes flying to too many places – driving down the price of tickets by up to 10 percent in recent months.
Accordingly, Lufthansa lowered its revenue expectations for 2019, from 2.4-3 billion euros down to 2-2.4 billion euros.
“I think there are a lot of initiatives going on to reduce unit costs and achieve the year-end forecast. At the end of the day, we are also trying to offer a premium service in the airline industry and try to differentiate that way from our competition,” Tobias Vogtlin, CEO of Lufthansa InTouch, the customer service competence center for the Lufthansa Group, told CCW Digital.
InTouch operates 13 service centers serving over 90 markets worldwide, and helps design and implement innovative customer services in the entire Lufthansa Group passenger services chain.
In 2017, the airline began testing technological CX upgrades, including using fingerprint and facial biometrics to ease congestion at check-in kiosks, updating its booking and customer service app to integrate with voice assistants like Alexa or Google Home, and introducing a new seating option known as premium economy.
Initially, the seating upsell gained little traction with customers, so Lufthansa placed tables with VR headsets at certain gates in airports in Newark, New Jersey and Frankfurt, Germany so customers could watch a short 360-degree film to see what premium economy would look like. According to Digiday, around 50 percent of customers who saw the video upgraded their seats.
Since assuming the CEO role at InTouch just over a year ago, Voegtlin says he has focused on three action areas to streamline the airline’s finances and operations: recruitment, retention and IT infrastructure. A major priority was increasing headcount by 20 percent.
“The focus over the last 12 months has been to stabilize operations and handle the volume of customer service requests,” said Voegtlin, who is speaking at CCW Europe in October. “The volume increased, especially last summer because flight operations had been unstable and air traffic control had capacity problems, which led to a lot of flight delays and cancellations.”
Image credit: Lufthansa
Last summer, European airspace bottlenecks caused delays to more than double compared to 2017, with each flight being postponed an average of 20 minutes. The International Air Transport Association called on governments and air navigation service providers to address staffing and capacity shortages, which were falling short as airlines added new routes and more travelers.
“I think the next strategic focus for Lufthansa InTouch is very much aligned with the whole Lufthansa Group customer service, including SWISS and Austrian Airlines – and that is pushing the technologies, developing new products and investing in quality to stay ahead of the game,” said Voegtlin.
As airlines compete more and more on price, it becomes especially important for individual carriers to find ways to stand out through the customer experience. It might sound counterintuitive, but Voegtlin says he believes it’s possible to provide premium customer service in a cost-effective way as Lufthansa seeks to reduce unit costs, and there are several ways to achieve this.
“One is obviously [prioritizing] automation, because for some of our customers, automated customer service is a premium customer experience,” he explained. “Others want a personal touch and a personal exchange. We can also offer this to our customers.”
While InTouch still offers live agent and in-person assistance with everything from booking to special service requests, airport check-in and more, there’s also a lot of work being done to push for self-service through the Lufthansa mobile app.
“We’ve developed the new customer service app to offer the customer the choice between calling us, asking for a callback, speaking via live chat with an agent or using a chatbot.”
At CCW Europe, taking place in Amsterdam from October 7-10, Voegtlin will share a case study of how Lufthansa InTouch went from operating at a loss five years ago to overhauling its financial, commercial operations infrastructure and growing headcount by 20 percent while turning into a profitable business.