Custom essays on Lufthansa case studies

Lufthansa Acquisition and Restructuring Strategies:
o Restructuring focused on corporate strategy to unite 6 business segments under one strategy that reinforced the core business- Passenger travel.
o 5 current segments: Passage, Logistics, MRO, IT, Catering & Tourism and a services group offering Insurance, Flight training and Business Travel management.
o Acquisition strategy focused on expansion in Europe and Globally. Geopolitical events made this strategy economically unviable.
o Current strategy focuses on equity stakes in other companies. (Deutsche Lufthansa AG: Company Profile)

The possible competitive strategies:
Analysing the competitiveness of the leading airlines in the world can identify the following characteristics:
– For network of carriers: focus on the international market, in particular, the transatlantic traffic; differentiated services, focusing on high quality service both on land and on board; coalescence, as well as active participation in global alliances and code-sharing programs, privatizationairlines, an extensive route network, frequent flights, based on their hubs, the existence of its own structures maintenance, provision of services for the airline.
– For low-cost carriers: the maximum cost reduction on all aspects of the carrier, a modern fleet with a single type of air vehicle; general standardization of the fleet, the dominance of the domestic market, efficient allocation of labor resources and their high performance, non-major hub airports, hubs; targeting small airports, targeting a certain segment of passengers.
– General features: the introduction of new technologies, programs, revenue management, Internet usage and electronic tickets; efficient system of scheduling, the active use programs to reduce fuel and insurance costs, a timely response to crises in the industry.
Airlines can benefit by expanding its network. Airlines can increase the frequency of flights, increasing the number of markets served. As a result, airlines with higher percentages of items receive a disproportionate share of income from high-yield passengers.
In particular, the company Lufthansa must cut off the cost of unprofitable customers and concentrate on maintaining their loyalty and additional sales in the profitable segments.
The Lufthansa company has the following customers:
o Platinum customers : Most Profitable customer, who are typically heavy users of the product, who are not overlay price sensitive and whose commitment to the enterprise is high.
o Gold Customers : The profitability level is lower and the commitment is not as high as the platinum members, even though they are heavy users.
o Iron Customers : These customers provide the volume needed to utilize the firm’s capacity but whose spending levels, loyalty and profitability are not so substantial enough.
o Lead Customers : Customers that cost the company Money. The company must minimize the customer segment, either by trying to upgrade customers or by disassociating from them. (Deutsche Lufthansa AG: Company Profile)
In 1993 Lufthansa AG has introduced a loyalty program Miles & More thus laying the foundation for long-term partnerships with its passengers. When the number of cardholders Lufthansa exceeded 7 million in the company appeared unit responsible for target marketing to this segment of customers. To get a complete picture of its customers Lufthansa uses decision SAS Customer Intelligence. SAS helps to identify certain groups of customers with general patterns and trends in behavior. Addressing the relevant proposals to these groups, Lufthansa has the opportunity to better meet customers’ expectations and thus develop their loyalty and increase incremental sales. (Deutsche Lufthansa AG: Company Profile)
Currently, to improve and strengthen competitiveness, the airline is also introducing information technology (IT), which can be divided in the following areas: the scope of booking and sales, e-commerce, and in improving services and passenger services, information technology to optimize and better manage company, reducing costs and fuel costs.
For the organization of Internet-sales the company Lufthansa uses own sites, as well freelance web portals (eg, Expedia or Travelocity) and resources created by groups of airlines (such as Orbitz in U.S. or Opodo in Europe). But the most effective channel for the distribution of tickets over the Internet are their own Web sites of airlines, which offer lower fares. Internet

In addition, customer service online at its Web site allows Lufthansa airlines to increase revenues and more by expanding the range of services offered.
Information technology can also reduce costs and simplify the airline business. Due to their implementation can be a significant advantage on optimization of the airline as a major structure, increasing its transparency, governance, using a number of specialized applications for the formation of a network strategy, cost management, revenue, flights, fuel, etc.

Conclusions:
The main trends in the competitive industry for Lufthansa are:
1. In a crisis company has not been able to quickly refocus its activities to new markets and lost part of consumers, as a result gained a significant competitive advantage low-budget airlines;
2. A surplus of freight capacity has led to that network airlines have become less oriented towards high-yield passengers, reducing the price for resuming flights;
3. Change in the legal framework for international regulation of civil aviation industry amid global crisis leads to a tightening of standards for organizing the activities of the airlines and the requirements for safety, driving away from the market of air carriers, who could not adapt to new conditions;
4. High prices for jet fuel, the danger of terrorist attacks, the war in the Middle East, the SARS epidemic, air locks, fuel burn – all these factors led to increased airline costs, and reduce their incomes. The plight of the industry’s increased consolidation of the air transportation market. This trend is currently the most important for Lufthansa.
5. Integration and acquisitions, when entering into global alliances and harmonization of services offered by airlines, are a way to compete and gain a strong position in various segments of domestic and foreign markets, can achieve a more efficient use of resources, enhancing international competitiveness at the expense of compliance with modern conditions and requirements of the market.