Group Strategy

The market and the competitive environment move very quickly in the aviation sector. Exogenous sources of uncertainty, resource bottlenecks, high inflation, shifts in the value chain and evolving customer requirements necessitate permanent change, but also offer opportunities. Current examples of this include significantly shorter advance booking periods than before the coronavirus pandemic, a significant increase in demand for sustainable products and more data-based product development and production management.

The Group’s strategy envisages continuous transformation and modernisation of the Lufthansa Group so as to be optimally positioned in a changing, fast-paced geopolitical environment with significant impacts on supply and value chains. The goal is to consistently act upon opportunities arising due to trends and market changes. Services, business models and organisational structures are to be continuously aligned with the complex and dynamic market environment. The aim is to safeguard the Lufthansa Group’s leading market position and economic success by developing it into an agile and flexible organisation that is even more competitive. In particular, a further increase in its customer orientation, accelerating innovation and digitalisation, corporate responsibility and sustainability, modern forms of work organisation and value-based management will ensure that the Lufthansa Group is ready for the future. In order to promote cooperation between Group companies and business segments, cultural development in the Lufthansa Group is driven by a Group-wide initiative.

The Lufthansa Group is continuing the transformation it has begun in recent years in order to remain successful in the future market environment. This includes repositioning Discover Airlines as an independent brand, for instance, and establishing Lufthansa City Airlines for further competitive hub traffic and feeder traffic at the German hubs of Frankfurt and Munich. Economies of scale are also realised consistently and flight operations with competitive structures and a good operational performance will be scaled up.

Within this long-term strategic framework, the Lufthansa Group sets tactical areas of focus in line with specific internal and external requirements. It focuses on the recruitment of new employees, for example, the retention and continued development of existing staff, and internal development opportunities for talented staff.

The aim is also to increase structural profitability by increasing income and cutting costs, in order to mitigate or offset the effects of inflation. Market opportunities for raising prices are seized and productivity potential is used to reduce costs. The productivity of aircraft and crews will be enhanced by reducing the number of aircraft types in the long-haul fleet, for example, and permanent optimisation of operating processes and the route network. Another aim is to make the fixed cost base as variable as possible, in order to minimise the impact of cost increases and of seasonal and cyclical fluctuations in demand.

In view of changes to the structures of supply and demand, an even greater focus on the customer is a core element of the Group strategy. Customers with their individual needs and preferences are at the heart of all activities and services. The Lufthansa Group aims to offer travel products with the highest quality standards, as well as tailored, flexible solutions along the entire travel chain. This is achieved by means of new products and services on the ground and on board. At the same time, customer service is being expanded and improved with innovative digital features and personal dialogue.

These goals are backed up by means of an integrated product approach. Passengers will experience a holistically linked range of attractive physical products, such as seating and lounges, attentive service from employees both on board and on the ground and innovative digital services. The Lufthansa Group strives to keep enhancing its premium standard and its consistent delivery, to expand its product range in line with the latest industry trends, and to continue refining its loyalty programme. Of essential importance is the fulfilment of its promise as a premium provider, at every point of contact throughout the travel chain. The focus here is, in particular, on all areas which are highly relevant for customers, which influence repeat purchases and a willingness to pay, and which thus generate value for the Lufthansa Group. The basis for all this is to guarantee the continuity and dependability of flight operations. It is also fundamental to ensure good customer service in the call centre, to expand the digital service channels, including the use of chatbots, and to automate processes to accelerate the fulfilment of customer demands in the event of flight irregularities.

In addition, the product range will be expanded in line with customers’ expectations. Specifically, this means a wider choice of individually selectable product components as well as an improved travel experience on board and on the ground, in the premium segment in particular. For instance, through its refit with the Lufthansa Allegris and SWISS Senses product generation seating, Lufthansa Airlines and SWISS offer a new travel experience in every class on long-haul routes. Austrian Airlines is also getting a new long-haul cabin with the introduction of the Boeing 787 Dreamliner. Customers with Lufthansa Group Travel ID or a Miles & More account will also have better internet availability on board, and so be able to use short messaging services free of charge on an unlimited basis. All customers will continue to have access to new service options in the expanded in-flight entertainment programme and to all the services of the Lufthansa Group apps during the flight. The culinary range will also be improved in the spirit of the premium promise. Customers will be able to select or order their meals in advance in future. The cuisine in Business Class will continue to be improved in terms of selection and quality, in order to offer a unique culinary experience. Particular attention will be paid in future to expanding the offering with new, high-quality service details. New digital customer services on the ground, such as information on current lounge capacities and a new check-in area for First Class and HON-Circle customers, will strengthen the hospitality profile of the Lufthansa Group Passenger Airlines.

The automation of customer services is also being advanced. The digital customer portal enables customers to access all relevant information relating to their journey and resolve issues such as rebookings, refunds or additional products quickly and easily thanks to new, interactive self-service options. There will also be a new approach to customer loyalty and personal interaction. In this context, the Lufthansa Group is expanding its existing, somewhat transactional concept of customer loyalty and will in future demonstrate greater individual appreciation for every passenger. In addition, the continuous expansion of the Lufthansa Group Travel ID, which recognises customers at every point of contact, no matter which airline they are flying on, will make it possible to match services and offerings with the personal needs of Lufthansa Group Airlines passengers.

These activities aim to improve customer satisfaction together with the operational areas and other interfaces. The Net Promoter Score (NPS) is an indicator of customer satisfaction and measures the willingness of customers to recommend the services of Lufthansa Group Airlines.

The airlines form the core of the Lufthansa Group. They are positioned in the relevant market segments as high-quality carriers. Their nationwide presence in their home markets enables them to offer an attractive range of flights and route networks. The Lufthansa Group aims to maintain the leading market position of its airlines going forward. To this end, the Lufthansa Group’s traffic system is continuing to be developed into a multi-traffic system, consisting of hubs, point-to-point traffic and intermodal offerings.

Lufthansa Airlines and SWISS will continue to set standards for quality and cost-effectiveness in future. With their wide range of destinations and frequent flights, they offer the greatest connectivity of all the European airlines.

Austrian Airlines and Brussels Airlines combine a high-quality and attractive product which is attuned to the needs of their local markets with a low cost base which can hold its own against low-cost carriers at the bases in Vienna and Brussels.

With Eurowings, the Lufthansa Group has an innovative and competitive offering in point-to-point traffic, which addresses both price-sensitive and service-oriented customers with low-cost basic fares and additional service options that can be booked flexibly.

Work is being continued on the systematic renewal of the Group fleet. Key targets are to cut fuel consumption, reduce carbon emissions and trim the number of aircraft models by retiring and phasing out older, less efficient models. Since 2022, additional state-of-the-art long-haul aircraft such as the Airbus A350 and Boeing 787 have strengthened the Lufthansa Group fleet. Additional aircraft of these two models and other short- and medium-haul aircraft were ordered in 2023.

In order to exploit opportunities in the long-distance leisure travel market, the range of short-, medium- and long-haul routes from the hubs in Frankfurt and Munich targeting private travellers is being expanded. Discover Airlines supplements and strengthens the tourism portfolio of the Lufthansa Group. Passengers are thus able to benefit from the wide feeder network and the established ground processes of Lufthansa Group Network Airlines. The global distribution strength of Lufthansa Group Airlines is also exploited.

Cooperation with partner airlines is becoming more important, in order to strengthen market presence in key traffic regions and offer customers attractive connecting flights at their destination. The Lufthansa Group’s successful joint ventures are therefore being developed and partnerships expanded in all key markets. The range of intermodal transport solutions that are seamlessly integrated into the travel chain is likewise being extended.

The Lufthansa Group is also seeking to play an active role in the consolidation of the airline industry, in line with its strategic and financial goals. In this area it focuses on safeguarding its existing market position and opening up new growth potential. Particular attention is paid to further regional diversification of the business model. Potential investments in other companies or their acquisition are always judged on the basis of their contribution to value creation.

Responsibility is the foundation of business activities in the Lufthansa Group. The Lufthansa Group aspires to lead the aviation sector with high standards in this area as well. It therefore builds continuously on its environmental commitment, is dedicated to many social issues and treats its employees and partners in the value chain responsibly and fairly.

In terms of environmental policy, the Lufthansa Group aims to cut its net carbon emissions in half by 2030 compared with 2019 and supports the objective of making aviation carbon neutral by 2050. Within the framework of these net goals, the Lufthansa Group sets itself specific efficiency targets for reducing carbon emissions in its core business segment that are line with the Paris Agreement and have been validated by the Science Based Targets initiative (SBTi).

In order to achieve these objectives, the Lufthansa Group is investing continuously in fuel-efficient aircraft. This is accompanied by the airlines’ operational efficiency measures. The Lufthansa Group also works with policymakers and partners in industry, technology and research to promote the industrialisation and use of sustainable aviation fuel (SAF). In addition, intermodal traffic is being systematically further expanded in all of its home markets.

The Lufthansa Group also includes sustainability aspects as a key factor in the design of its products and services. For example, it not only offers “Green Fares”, but also gives its own passengers and travelers of other airlines the opportunity to reduce CO₂ emissions by purchasing SAF or to offset them through high-quality climate protection projects with Compensaid and Squake. Business trips made by Lufthansa Group employees are also offset. In its product and service development, the Lufthansa Group applies the principle of Reduce – Recycle – Reuse – Replace to avoid waste. Here the aim is to replace disposable products with environmentally friendly products wherever possible. The focus is also on avoiding food waste.

In terms of responsibility for its employees, the Lufthansa Group attaches great importance to offer its staff an attractive working environment with transparent structures, efficient processes and a wide range of social benefits. Lufthansa is thus seeking to further expand its already good position as an employer within the aviation industry as a whole. At the same time, large German companies also serve as a benchmark. For instance, the Lufthansa Group offers its employees an extensive range of opportunities for their development, thus contributing to employee satisfaction and safeguarding jobs. Diversity and equal opportunity are seen as a strength. In terms of social responsibility, the Company supports disadvantaged people worldwide via the financial and personnel support for educational establishments and training provided by help alliance, the Group’s own aid organisation.

The central importance of sustainability for the Lufthansa Group is reflected in the fact that it is represented at the Executive Board level. Implementation of the sustainability strategy is further supported by its inclusion in the remuneration of the Executive Board members and the management levels. The Lufthansa Group also actively supports the measurement by relevant international ESG ratings, such as MSCI, Sustainalytics, CDP and ecovadis, to ensure transparency about activities and progress at all times. As well as the non-financial declaration which is required by law, the Lufthansa Group also reports according to TCFD and SASB standards, in order to meet the various needs of its international stakeholders.

Dialogue with the Company’s stakeholders is also a component of responsible corporate governance. This continuous exchange gives the Lufthansa Group an understanding of its different interest groups’ needs, expectations and wishes, which permits their inclusion in the Company’s business practices.

With its Aviation Services segment, the Lufthansa Group has several companies that are global leaders in their respective sectors. In order to secure and build on their successful positioning, the companies in the Aviation Services segment are permanently adapting their business models to changing market conditions and competitive environments. Lufthansa Cargo is increasingly participating in the growth of international eCommerce shipments within Europe through the use of the pure freight version of the medium-haul aircraft A321. The Company is moreover modernising and expanding its cargo centre in Frankfurt, in order to participate in the growth of the airfreight market.

The value contributed to the Lufthansa Group by every one of the Aviation Services is reviewed and refined continuously. In connection with its positioning as an airline group, the Lufthansa Group not only continuously assesses the attractiveness of the individual market segments, it also determines whether it is the best owner for the respective company on the basis of existing or potential synergies. It may therefore make sense for certain Aviation Services companies to further develop outside the Lufthansa Group or together with partners.

In order to fully exploit potential synergies between the subareas and to minimise the need for coordination, the organisational structure and governance processes of the Lufthansa Group are being continuously developed and adjusted in line with current requirements. The aim is to achieve lean, flexible and efficient structures as well as quicker decision-making processes. These changes are being accompanied by an expansion of agile and cross-functional work methods. This also aims to support cultural change and promote a flexible and enterprise-based mentality.