Lufthansa sees yields improving

German carrier Lufthansa has completed a comprehensive cost restructuring exercise by rationalising sales network and cutting two flights from India over the last several months.
Lufthansa operates 52 flights per week from seven destinations. Like other carriers, Lufthansa has also seen yield per passenger falling in the last several months because of the global meltdown and consequent fall in passenger traffic. However, yields are improving again. But has the cost rationalisation exercise achieved what it set out for?

Axel Hilgers, director (south Asia), Lufthansa, told DNA, “I see an improvement in yields (per passenger) but this is happening slowly and not at previous levels. We need to work further on cost levels… yields fell 20% during the global slowdown and even though passenger traffic is back now, yields are still not back with us.” Earlier this year, Lufthansa centralised marketing and other functions while outsourcing ticketing and reservation functions. This meant closure of ticketing offices in some cities and rationalisation of sales staff. It has also cut one flight each from Mumbai and Bangalore.

As per bilateral agreements between India and Germany, airlines from both the countries are allowed to together operate 69 flights to and fro per week.  Since no other German airline currently flies into India, Lufthansa is free to use the entire quota of flights. But Hilgers says that there are no plans yet to increase flights to or from India.

“We are not going to add flights now — we never used all the 69 entitlements even in the past. But when business is back, we will perhaps restore the Bombay-Munich flight and could add flights from Hyderabad and Kolkata.” Hilgers acknowledged that the all-business class flight from Pune to Frankfurt saw a fall in passenger traffic in the past but things have improved now and Lufthansa has no plans to pull out this flight. Lufthansa currently offers non-stop daily flights to Frankfurt from Delhi and Mumbai.

To counter falling traffic, the airline had earlier reconfigured some aircraft and increased seats for the economy class and cut business class seats. This reconfiguration not only helped in increasing the overall load factor but also increased the availability of seats per aircraft. Hilgers said Lufthansa still wants to fly the largest passenger airliner, the A380, to India, but is yet to seek permission from the government for this.