Few U.S. Lufthansa Deals Are Single-Airline Agreements

Fewer than 5 percent of Lufthansa's corporate deals in North America are now single-airline agreements, vice president for The Americas Jens Bischof told EuroBTN last week. In an exclusive interview, in which he also noted the beginnings of a return to business class by U.S. clients, Bischof said the overwhelming majority of Lufthansa's deals include the other Star Alliance carriers based in North America.

"If we talk about North America, there are very, very few exceptions—well below 5 percent—where we have stand-alone deals," said Bischof. "The rest are joint offers with our partners, Air Canada, United and now Continental, where we team up to create a better offer."

Bischof added that he is seeing a definite "trend for broader deals than just a single airline agreement" worldwide. Rather than embracing the entire Star Alliance, however, these generally comprise a case-by-case combination of Lufthansa-owned airlines, including Swiss, Austrian Airlines and Bmi British Midland, and other Star Alliance members.

"There is a clear set of possibilities with the Lufthansa group airlines, the joint-venture deals we have on the transatlantic market and the Star set," said Bischof. "It is a one-stop solution which can create a lot of efficiencies, not only on the airline side but more importantly also on the customer side because you can negotiate a joint deal with several airlines in one meeting."

Bischof rejected recent suggestions that transatlantic airline joint ventures, including the one Lufthansa operates with Air Canada, United and Continental, could crush competitiveness through their large marketshare. "Prices have been going down year over year," he said. "Even with more consolidation, there is no way to reverse that trend because there is so much capacity in the market, which clearly works in favor of the travel managers."

Transatlantic market volumes have stabilized, according to Bischof, and he is seeing a distinct, though limited, trend for clients to return to business class. Sectors hit early by the recession, including automotive and financial services, are leading the way. Bischof attributed the upgrading to companies realizing they have deterred their travelers from making essential journeys. "I wouldn't say it was an excessive trend, but a few early birds are realizing this is affecting their revenue and therefore reversing their policy," he said.

An edited transcript of the interview will appear in the Dec. 14 print edition of BTN.