Businessmodel of Lufthansa Group

Customer Segments

Lufthansa has a segmented business model. It targets, along with its subsidiaries, two groups: individuals and business groups.

To the individuals, it provides travel services and although it has customers with various social backgrounds, its focus is mainly on the business travelers.

For business groups, it provides cargo air services. However, Passenger transport is the core business segment of the Lufthansa Group and consequently, individuals are its focus customer segment. It provides air travel services to individuals in 18 domestic destinations and 193 international destinations.

Value Propositions

Lufthansa’s primary proposition values are technical competence, innovation, reliability as well as high standards of security.

From the very outset, Lufthansa has made efforts to remain technically competent in the global aviation market. Currently, its fleet size is 268 excluding the subsidiaries. The Lufthansa fleet comprises aircraft of almost every size. Throughout, state-of-the-art technology is used.

Lufthansa has always come up with innovative ideas for expanding itself and its customer base. For this purpose, it has a separate hub known as The Lufthansa Innovation Hub that scouts and builds startups as well as digital companies with strong products for travel to jointly co-create innovative offers.

For ensuring maximum security of its passengers and consequently gaining their reliance, Lufthansa has a separate unit - Lufthansa Technical Training (LTT). It is an independent global leading training provider for staff involved in the maintenance, repair and overhaul (MRO) industry for aircraft, engines and aircraft components of civil aviation.

Channels

Lufthansa is one the first airlines which put an end to partnering and granting commissions to travel agencies and it also doesn’t employ affiliate programs for marketing so it does its marketing completely on its own. For this purpose, it employs the regular marketing tools such as TV, radio, and its website.

Lufthansa is one of the most social brands around and it is not for nothing. It employs the busiest social network platforms such as Facebook, Twitter, Google and Pinterest to market itself. It updates its pages/profiles on these platforms on a daily basis.

Customer Relationships

Lufthansa’s customer relationship is primarily of automated services nature which means that the company recognizes individual customers and his/her preferences. It operates on Frequent Flyer Program “Miles & More”, a part of Star Alliance strategy. It is the largest traveler loyalty program of Europe with more than 25 million members.

This program provides benefits for several different frequent flyer levels and provides. Customers climb the status levels to become eligible for certain preferences. The destination countries of Miles & More are Germany, Switzerland, Luxembourg, Poland, Croatia, Belgium, Serbia, Austria, Egypt, India, Malta, Slovenia and Kazakhstan.

Key Resources

Lufthansa’s main resources are its human resources, airplanes, hangars and computer networks.

However, the most important of all are the human resources and the airplanes. Being an international airline, it’s a necessity to bring in the best aircrafts with maximum fuel-efficiency and security.

As for human resources, high loyalty among employees is one of the differentiation factors claimed by Lufthansa itself.

Key Activities

Lufthansa’s key activities are fleet management, network management, ticket sales and customer loyalty management.

In fleet management, Lufthansa makes effort to reduce the risks connected to aircraft investment, productivity and efficiency, while minimizing its overall staff and transportation costs. The Lufthansa fleet comprises aircrafts of almost every size. Throughout, state-of-the-art technology is used. Currently, its fleet size is 268.

Lufthansa is a part of Star Alliance, and so it has a large network of domestic and international destinations. It operates services to 18 domestic destinations and 197 international destinations in 78 countries.

Lufthansa sells tickets to its customers through its official website and various flight-booking websites.

As for customer loyalty management, it has a Frequent Flyer Program “Miles & More” in place which offers various travel packages to its customers based on how often they travel.

Key Partnerships

Lufthansa is one of the significant members of Star Alliance - the world’s largest global airline alliance comprising of 27 airlines and offering 21,900 flights on a daily basis to more than 1000 destinations in nearly 200 countries.

Being a significant member of such an alliance, it enjoys many benefits such as coordinating with numerous other airlines and thus shortening the overall journey time for passengers switching from one Star Alliance airline to another on connecting flights.

Furthermore, as a member of star Alliance, its costs are also reduced and it is able to harness synergies to further improve its customer services. Thus, its membership of Star Alliance provides it the opportunity to provide better services to its customers and, consequently, generate profits.

Cost Structure

Lufthansa’s cost structure is value driven as well as cost driven as it offers both the premium services for high-end customers and no-frill services for the low-end ones. It is affected by fluctuating fuel prices but it has a strong fuel hedging policy in place.

Revenue Streams

Lufthansa has a single revenue stream: it generates its revenue from the fare it charges its customers for the air services it provides to them. It charges its customers depending upon the ticket type, destination, services, membership status and other specifics.