Lufthansa German Airlines and NetJets next week expect to launch a cooperative program blending scheduled flights and private jet services. First and business class customers will be able to connect between Lufthansa's regular long-haul flights in and out of the carrier's Munich hub and NetJets-operated flights to more than 1,000 European airports. The exclusive partnership marks a new development in premium airline services and positions the two companies to pursue additional corporate business.
Meanwhile, other companies are working toward hybrid commercial-corporate models, including Swiss International Air Lines for transatlantic flights and Executive Jet Management in the United States.
Starting with the new summer timetable effective March 29, Lufthansa Private Jet will undergo six months of testing with a targeted group of premium passengers. The carrier will gauge the response from corporate clients and agencies, consider distribution options beyond call centers and determine how best to include Star Alliance partners.
"With corporations, on an individual basis, we will see how we can integrate this into corporate agreements," said Steffen Niesel, Lufthansa general manager for key accounts in North America. "It significantly opens up the world of private travel to the corporate customers as part of one seamless product."
Lufthansa said the program will offer "thousands of individualized flight options" and provide customers with scheduling flexibility and other pre-flight and inflight conveniences associated with private jet transport. Initially, fixed pricing is dependent on aircraft size and distance traveled and generally starts at a few thousand euros. Each additional passenger on any given flight, however, only would incur a e300 fare (US$403), potentially making the product more attractive to groups of travelers from the same company.
"Even if you are in a lie-flat seat on the transatlantic flight, you still do not sleep well, so the ability to then get onto a private jet—if the cost is remotely reasonable—would be attractive," said Tower Travel Management president John Smith. "We have some clients that definitely would take advantage of it, but probably not on a mass scale."
According to the 2004 Business Travel News Corporate Travel 100
(BTN, July 5, 2004), large Lufthansa clients with significant North American operations include Bayer, the International Monetary Fund, News America, SAP Americas, the United Nations and the World Bank. Niesel said certain top accounts previously were identified as potential users and that discussions with clients would continue this week at the carrier's corporate advisory meeting in New York.
"We are not sure how this would fit into our portfolio, but we are open to try the service, as long as it is price-competitive in the market, because this might be a happy medium," said Alexander Rahe, senior transportation officer for the IMF, an entity with a preferred Lufthansa agreement and some charter service needs. "As with any charter flights, if you have enough people traveling or are going someplace with limited scheduled service, this starts to make sense."
The NetJets partnership bolsters Lufthansa's focus on the premium travel market. The German carrier in the past few years opened an exclusive first class terminal and lounge in Frankfurt, announced plans to improve business class cabins on both intercontinental and intra-European flights, and developed an all-business class service on routes from Chicago and Newark to Germany, handled by charter operator PrivatAir
(BTN, March 24, 2003).Meanwhile, Lufthansa acquisition target Swiss International Air Lines
(see story) also offers all-business class transatlantic operations furnished by PrivatAir. The carrier earlier this year launched new nonstop service between Newark and Zurich designed specifically for business travelers. First announced last summer
(BTN, July 19, 2004), the six weekly flights operate with a Boeing business jet configured with 56 lie-flat seats.
Swiss vice president of intercontinental markets Marcel Biedermann in January told BTN that a majority of passengers are frequent flyers from financial and pharmaceutical companies and that the carrier's top priority is to attract more travelers from existing corporate accounts.
PrivatAir this month asked the U.S. Department of Transportation to permit codesharing with American Airlines on the Newark-Zurich route, as well as any other routes PrivatAir may serve in the future on behalf of Swiss. American and Swiss received antitrust immunity from DOT in late 2002
(BTNonline, Nov. 25, 2002) and have since developed integrated contracts for several corporate accounts.
Air France also has identified specific routes for an all-business class service. Launched last year, its Dedicate program is designed for energy companies, which send travelers to more remote destinations
(BTN, Feb. 9, 2004). Meanwhile, Primaris Airlines is working to launch all-business class operations between U.S. and European cities
(BTN, Oct. 25, 2004).The blending of scheduled and private air transportation models has been less successful in the U.S. market. Failures this decade include United Airlines' Avolar unit
(BTN, March 25, 2002) and a hybrid product attempted by Indigo
(BTN, March 10, 2003). Only Delta Air Lines, through its Delta AirElite subsidiary, offers private jet services with links to commercial operations
(BTN, March 15, 2004).Executive Jet Management, however, evidently views the concept as viable in the United States. The Cincinnati-based company, which manages 80 aircraft for corporate clients and also operates charters and private shuttles, last month applied to DOT for authority to begin scheduled domestic service as a commuter carrier. Though many details were not publicly disclosed, Executive Jet Management said it plans initially to operate as many as 30 weekly flights between the New York and Los Angeles metropolitan areas and as many as 10 weekly flights between New York and Chicago. It identified Westchester County Airport in White Plains, N.Y., and Chicago Midway Airport as likely candidates for its new business jet services.
The company said it is in discussions to identify a partner that would handle marketing and operate the services as a public charter operator. Officials declined to elaborate on early corporate sales efforts.
"This model has been tried many times because there are intrinsic elements thought to be attractive, such as lower price points, but it is not an easy thing to do," said Steven Hankin, CEO of private jet membership company Sentient Jet. "We have looked at it ourselves, and while it is a very challenging business, it could be an important evolution."