Lufthansa's plans to unbundle business class

By David Flynn, June 26 2019

Buying and flying Lufthansa business class could be a very different proposition from next year as the German carrier moves towards what it terms "tailored needs-based airfare bundles".

Today, you just buy a business class ticket – and of the scores of seats in the business class cabin, every passenger is more or less treated equally (aside from what special attention might be extended to those with elite Miles&More HON Status).

But in the future, such as on Lufthansa's Boeing 777X flagship due to take wing in late 2020, you could purchase a baseline business class fare and then pay extra for not only a better seat – one with more space, legroom or privacy – but a series of bundled packages which could include services such as inflight WiFi.

Lufthansa has already begun talking up its move from a one-size-fits-all business class cabin to a more bespoke 'Business Class Plus' offering designed around individual needs and price points, but now we're starting to see more details on exactly how this will play out for the business traveller.

At this week's Capital Markets Day – where the airline also revealed its second-gen Boeing 777X premium economy seat – Lufthansa plotted a simplified set of base fares replacing the current roster of ticket types, with add-ons available in all cabins except for first class.

Those options, the airline says, will be built around "tailored offers and services" such as "Individual food offers" and a "new variety of seat options."

Lufthansa has already indicated that the unique layout of its Boeing 777X business cabin would see an extra charge levied on those seats which convert to a longer lie-flat bed or enjoy extra working and bench space such as the central 'throne' seats.

 "For example, having a 220cm bed (as an upsell) is of course a selling argument, especially for (taller) guys like me!" explained Lufthansa exec Harry Hohmeister.

“It's not just one business class anymore. Within the (Boeing 777X) business class cabin, you can upgrade yourself to an even better product than just standard business class," Hohmeister told Executive Traveller earlier this month, although he's quick to declare this approach “it's not unbundling, it's upgrading.”

For example, Hohmeister said Lufthansa won't remove standard business class inclusions such as lounge access – in contrast to Emirates, which is now selling deep-discount business fares which forego lounge access and the chauffeur drive service. He also maintains that the price point for the standard Boeing 777X business class experience will remain comparable to today’s business class fares.

All the same, today's 'static branded fares' will be replaced by what Lufthansa describes as "need-based bundles (and an) upselling structure." The key to this, in turn, is "bundling the right offers and pricing them according to the customers’ willingness to pay."

Lufthansa cites examples of what it describes as Efficiency and Traveller packages – and even a beefed-up Plus version of each – being purchased atop a base fare.

Passengers are being broken down into sociographic sets, each representing a discrete chunk of Lufthansa's market, so that these add-on packages can be designed to suit their perceived needs.

The airline is also changing its own definition of premium travel, from being simply a class of travel to something which is "defined individually by every customer."

“We have to make clear in the market that we are not disrupting the (existing business class) product, but developing it to a better quality standard," Hohmeister told Executive Traveller, "to give the customer the best selection for themselves in terms of individualisation."

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

danielrp

danielrp

Qantas - Qantas Frequent Flyer

09 Jan 2019

Total posts 6

Very smart approach by Lufthansa! Can see this being adopted across more airlines in the years to come.

QFP1

QFP1

05 Mar 2015

Total posts 56

I actually don't mind this idea, especially if base fares are equivalent to today and the 'plus' bundles are good value, but let's see how it shakes out in practice.

Aidan

Aidan

05 Dec 2018

Total posts 120

With those throne seats they have, it makes sense. I’m not tall but would love the extra leg space instead of using a foot hole.

If you can pay extra for it, it makes it fair contention for anyone to purchase.

Anna80

Anna80

09 Mar 2015

Total posts 20

Trying to work out what else could be bundled besides WiFi, as lounge access is remaining. Could they possibly be adding an upgraded meal service, a bit more like first class, where you can pay extra to get a better quality meal and matching wines?

TheBigM

TheBigM

07 Mar 2017

Total posts 32

Sure. The group already offer meals for purchase in economy cabins, as upgraded offerings to their standard meal.

JakeDrake

JakeDrake

13 Mar 2014

Total posts 27

This reads to me like an erosion of value for customers. Great for the Lufthansa bottom line but phrases like "the price point for the standard Boeing 777X business class experience will remain comparable to today’s business class fares" (i.e. it will cost the same but you get less unless you pay more), "upselling structure" and "according to the customers’ willingness to pay" all speak to improvements for their business but not necessarily value for the customer.

AT

AT

Qantas - Qantas Frequent Flyer

14 Sep 2012

Total posts 254

Absolutely spot on. So everything that you get today at no additional charge in business class, will be available tomorrow with a charge and we'll use marketing speak like "price points" "experience" comparable" "upsell" to try and cover up what we've just taken away from you.

Traveller14

Traveller14

17 Sep 2015

Total posts 391

Dangerous for LH to do this because if we all cotton on we're paying more for less, some savvy travellers may switch to competitors. I'm assuming the others don't all follow suit.

ChristopherSolo

ChristopherSolo

Etihad - Etihad Guest

26 Apr 2019

Total posts 4

JakeDrake - spot on, I reckon.

andrewjason81

andrewjason81

02 Jan 2019

Total posts 10

It will start out with a few minor tweaks, then some executive will proclaim, “this has been phenomenally popular” after which everything will be up for grabs. So in 24 months’ time, you shall see the LH Group introduce a Business Lite product similar to what EK have done. This move is simply the slight turn of the sauerkraut jar lid.

AsiaBizTraveller

AsiaBizTraveller

20 Nov 2015

Total posts 59

I must be the only person here who doesn't object in principle to unbundled business class fares or to Lufthansa's proposed approach even compared to Emirates' 'business lite' package.

If I can get a business class fare quite a bit cheaper than the regular rate then I can still get lounge access through my frequent flyer status or I can use a Plaza Premium lounge and still come out ahead. I wouldn't be thrilled about getting a lot less miles or tier points but when my company is buying the ticket that's their call and it leaves more money in my project budget for other things.

It really comes down to how an airline implements any of these 'tailor-made' business class fares. In the case of LH we don't have details and they've said the base fare would be same as today so I'll wait until I see more details.

AJW

AJW

16 Nov 2011

Total posts 507

The idea is sound, but as others have said if the unbundled price is the same as the all inclusive price today then that is not good for the customer.

Mikana

Mikana

UA

09 Mar 2016

Total posts 27

This will not do anything good for business class customers.

Rxm

Rxm

Jetstar Airways - Qantas Frequent Flyer

14 Jan 2017

Total posts 12

I would have to agree with the skeptics. They won’t make the base fare cheaper just make you buy things included today as an add on. And how far does unbundling go. Next you will have to purchase a toilet pass to use the loo. That way if you are happy to hold yourself for 6 hours why pay for a toilet you aren’t going to use. Then each time you press the call button there will be a service charge. Perhaps if you go to the galley to pick up your own prepurchased meal add on you can save even more. Why not just keep the product simple to use. This is all just money making spin. Things will cost extra but nothing will be cheaper.

AsiaBizTraveller

AsiaBizTraveller

20 Nov 2015

Total posts 59

Some really stupid examples there. Seriously. I get you're trying to be funny and clever but let's have a sensible discussion around this.

I agree that 'keep the product simple to use' is the ideal approach for us travellers but I don't mind the notion of add-ons as long as they don't mean paying more for what I already get by taking it away in the first place.

But if there's an option in business class to get a bundle of say a flight pass for WiFi plus something else I find appealing, for less than the combined cost of those things, I'm all for it. Maybe there will be an option to double extra miles and status credits for a flight by paying an extra fee, that would be something appealing to a lot of frequent flyers if the price was right.

krisdude

krisdude

Air New Zealand - Airpoints

21 Jan 2016

Total posts 159

I agree with your 2 comments. LH is moving to a ' Seat to Suit Fare' business model similar to what NZ has been doing. It is about an aircraft carrying less weight and less wastage of food, drinks and soft cabin products which result is less fuel burn and carbon emissions.

If you are flying 5 hours of more on an over night flight, then it is great to have a lay flat bed and good breakfast in the morning but do you need to have a 4 course meal dinner when you have a meal in the lounge?

To me, a base business class product would be a seat, 2 carry on items, earn mileage, 1 checked luggage item up to 30kgs, lounge access, a light healthy meal or healthy snacks, a main meal, full IFE access and basic range on alcoholic drinks. From that basic package, you can add 'add on' packages to make your flight more comfortable.

crosscourt

crosscourt

Qantas - Qantas Frequent Flyer - Chairmans Lounge

01 Sep 2011

Total posts 349

Couldn't have said it better than JakeDrake . Airlines continue to erode their offerings. Its frustrating.

Red Cee

Red Cee

15 Feb 2018

Total posts 45

Can see that LH are commencing the race to the bottom for Business Class.

Jazzop

Jazzop

02 Dec 2016

Total posts 79

Will be interesting how this works with company travel rules. You know you're entitled to a business class flight, but what about the extras?
But isn't this what happens already in some airlines economy products? Air NZ for an example.

ConcordeRay

ConcordeRay

18 Sep 2015

Total posts 5

I think I enjoy reading the comments- more than the articles-from such an august group of travel veterans, and I do want to throw out one variant that as far as I know has only ever been implemented by NZ: depending on whether my ticket is company paid or not, I faithfully wait for the upgrade availability with my "home" carrier EK, and either use my points or pay gladly for a J sleeper seat on my 16 hour flight that I commute on.On so many occasions, however, when having to go "in the back", I have always told anyone that will listen my willingness to pay extra for having a seat or two next to me stay empty, always a happy compromise.

Where are the revenue management "gurus" on this one?It might give the gate agents closing flights a challenge. but I would gladly pay up to even the amount of a last minute upgrade in exchange for the privilege of stretching out in a row of 3 or 4 on a widebody. Can anyone explain why the airlines are willing to lose the huge amount of revenue they could generate from this? I habitually carry a large amount of hard currency cash and broker my own deals before doors are closed, leading to some hilarious exchanges of back and forth bazaar type negotiations, but if the nice vacationing couple on 56G/H are willing to move elsewhere, I will give them whatever amount it takes to entice them to move elsewhere.Everybody is happy, yet the airline stupidly loses the revenue I just paid to that nice couple! What gives, RM guys?

UpUpAndAway

UpUpAndAway

QF

11 Jul 2014

Total posts 288

In the old days if the hotel was empty they would give you a better room, these days if you don't pay for the upgrade you get the poor persons room even if the hotel is empty. I smell the same thing here, just another way to wedge the money out of your pockets again.

h15t0r1an

h15t0r1an

29 Jan 2015

Total posts 20

Yup

Unbundle and downgrade.

Just what the industry did, now we May 2* as much in PY, as everyone got as part of the deal for Y not very long ago

They want to salami slice every bit of value out of Business Class now, and charge for it.

2A

2A

23 Feb 2017

Total posts 14

More crap to wade through when booking flights. I'm busy. I want as few clicks as possible. RC

GBRGB

GBRGB

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 216

Sounds to me like they want to Jetstar business class travel

bl812

bl812

Emirates Airlines - Skywards

11 Mar 2015

Total posts 180

soon it will be like in a restaurant-you order and than you pay whatever you consume-where are we heading with this crappy approach?LH is the worst business class within Europe anyway

mancho90

mancho90

United Airlines - Mileage Plus

13 Mar 2015

Total posts 76

Well.. it's very similar to what is already offered thru LX on the "Throne" seats are about $240 or more depending on the route. Some of the singles side windows (seat facing window) are reserved for HON member.. The you can add more special services and extra things

Austman

Austman

Qantas - Qantas Frequent Flyer

09 Jan 2013

Total posts 16

It's nothing more than the general LLC model going into the business class product

It's already happening elsewhere.

Not sure if it's great or not...

habui

habui

19 May 2015

Total posts 22

Another attempt at drip pricing.

We can see how that went with upmarket hotels introducing so called resort fees.

Jacklim

Jacklim

06 Mar 2018

Total posts 6

AirAsia, king of fragmenting services with a price on everything, arrives at LH.

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