Interview: Lufthansa Group

Planning for a positive balance to rekindle the aviation industry

Stefan Molnar, Lufthansa General Manager Thailand, Vietnam, Philippines and the Mekong Region

The outlook for international air traffic has been strongly affected by the Covid-19 pandemic. Although there are signs of recovery, challenges still exist, especially different countries’ travel restrictions and long periods of quarantine after travel. What will be the adaptation of airlines to the difficult situation and new reality? UPDATE recently asked for the views of Mr. Stefan Molnar, General Manager Thailand, Vietnam, Philippines and the Mekong Region for Lufthansa Group with its airlines Lufthansa German Airlines, SWISS International Airlines, Austrian Airlines and Eurowings.

What do you feel about Thailand’s attractiveness as an aviation hub in the ASEAN region and as the regional hub for hi-tech aviation maintenance, repair and overhaul (MRO)?

Thailand has become a major aviation hub in the Asia-Pacific region, especially because of the Thai government’s policy of Industry 4.0. In this context, the aviation industry has been already defined as one of the core industries Thailand intends to invest into. The expansion of U-Tapao International Airport as part of the Eastern Airport City development will potentially turn the country into an aviation hotspot in Asia-Pacific. The emergence of the Maintenance, Repair and Overhaul (MRO) facility at U-Tapao also accommodates the production of aircraft parts and aircraft-related products, putting Thailand in a strong position to establish itself as a regional center for MRO services. In other words: Thailand is a key aviation hub – now and even more so in future when our industry returns to pre-pandemic levels.

What have been the main opportunities in Thailand for Lufthansa Group?

Before Covid-19, the Lufthansa Group Airlines Lufthansa, SWISS and Austrian Airlines were the largest European airline group flying to Thailand, with a long-running history of more than 60 years. Thailand is one of our major markets in Asia and Bangkok one of the major hubs in the region. Normally, we offer 28 flights weekly, mainly to and from Bangkok as well as seasonal flights between Phuket and Switzerland. In the past three years, we have strengthened our presence in Thailand by increasing our capacity with premium products and services. For example, we operated the world’s largest aircraft, the Airbus A380 as only European airline, flying between Bangkok and Frankfurt, and also introduced flights between Bangkok and our Munich hub, Europe’s only five-star airport. It goes without saying that we strongly believe in Thailand returning to former strength once the Coronavirus crisis is over. With EEC initiatives in place, Thailand will have plenty of opportunities to thrive and to remain what it has always been: a highly attractive destination for travelers and a highly attractive market for investment. That being said: we are ready to increase our flights in and out of Thailand as soon as the situation allows for it.

How has the aviation industry faced the Covid-19 impact and what are the current routes for Lufthansa Group’s commercial flights and flights connecting Thailand and Germany?

We reacted swiftly. Our airlines with their passenger aircraft and our cargo business with its freighters play a crucial role in sustaining essential supply chains, keeping international trade alive, and reuniting people and cultures in this time of crisis. In other words: we and other airlines will continue to play our part in helping the world to reconnect. In addition, we have to keep reassuring customers and governments alike that it is safe to travel by plane. But of course Covid-19 still has a profound impact on our industry. It will take airlines several years to return to pre-Covid-19 levels. Prior to the lockdown in Thailand, we maintained our flights to Frankfurt to ensure connecting Bangkok and Europe. Now we offer seven flights a week: two to Frankfurt, two to Vienna, and three to Zurich. In the coming months, we plan to increase our schedule to Bangkok at the discretion of the Thai government. Currently, our industry and thus economies worldwide are affected by governments’ travel restrictions. For example, In Thailand we have a situation that only some groups of people are allowed to enter the country. Even though they need to take a coronavirus test before departure, a two-week compulsory quarantine must follow. Obviously, only few people are eager to travel under these circumstances unless they really have to. It should be common sense that passengers tested negative twice – prior to departure and on arrival – should be allowed to enter a country without quarantine. That is why Lufthansa Group will continue to be deeply involved in the development of testing centers together with our partner Centogene. Test centers have been successfully put into operation at major German airports in Frankfurt, Hamburg, Düsseldorf and Munich. For example, throughout summer 2020 more than 150,000 passengers at Frankfurt Airport underwent SARS-CoV-2 PCR testing. Over a six-week period, only 1 percent of the samples were positive – this proves that regular air travel is not responsible for any increase in infection numbers. Over 97 per cent of the test results were digitally transmitted to passengers in August 2020 in less than 24 hours. Furthermore, customers

who had registered for the test in advance only had to wait about 20 minutes before being tested. Also, it has been documented that 2,000 chains of infection were broken thanks to testing at Frankfurt Airport. Of course, if someone tests positive before departure, they shouldn’t be allowed to travel. And if they test positive on arrival, a quarantine certainly makes sense. The next logical step are antigen rapid tests, delivering test results in half an hour or less. Since the beginning of September, a Lufthansa Group task force has been working on this topic at full throttle. For a good reason: Rapid testing instead of quarantine is the key to unlock air travel and therefore to support kick-starting economies again.

What can passengers expect when taking Lufthansa Group flights?

Apart from the comfort we offer our customers, we have industry-leading health and safety measures in place for all of our airlines that reduce the chance of contracting the virus during one of our flights to an absolute minimum. Among other things, because all Lufthansa Group aircraft are equipped with state-of-the-art HEPA filters that continuously clean cabin air: all recirculated air is filtered and cleaned of impurities such as dust, bacteria and viruses. This is done to 40 percent of cabin air, while 60 percent is added as fresh air from outside the aircraft. HEPA filter technology is also used in air conditioning systems for hospital operating rooms to create an almost sterile environment. Furthermore, all procedures and processes throughout the entire travel chain have been and will continue to be reviewed to guarantee the maximum safety of each and every one of our customers and will be based on the latest findings and hygiene standards of experts. Altogether, it is safe to say that Lufthansa Group airlines have always maintained the highest standards of safety and hygiene for their passengers – it’s at the core of our DNA. We already did a lot before the coronavirus crisis hit the world, and we will certainly continue to do so in these extraordinary times.

What is Lufthansa Group’s revenue management strategy during the current crisis? Also, what other sources of revenue and belt-tightening measures has Lufthansa Group been using since the start of the Covid-19 pandemic?

What we offer our customers is flexibility. For example, passengers can rebook all fares for Lufthansa, SWISS, Austrian Airlines and Brussels Airlines cost-free – as often as they wish. This applies worldwide to new bookings on short-, medium- and long-haul routes. We will also increase our focus on international leisure travel operated by Eurowings. But this does not necessarily mean that corporate travel will vanish: recent surveys show that companies see business travel as essential for the future. Financially, the Group had liquidity of 10.1 billion euros at its disposal at the end of September. This figure includes undrawn funds from the EUR 9 billion stabilization packages from Germany, Switzerland, Austria and Belgium. Out of those, 6.3 billion euros are still available. The Group is also in a position to withstand further burdens from the corona pandemic. Demand for air travel is expected to remain low in the coming winter months due to the global evolution of the pandemic and the associated travel restrictions. According to current planning, the Group’s airlines will only offer a maximum of 25 per cent of the previous year’s capacity in the fourth quarter to ensure that flight operations continue to generate a positive cash contribution. At the same time, Lufthansa Group is working intensively on restructuring measures in all business segments in order to achieve short and medium-term cost savings and minimize the operating cash outflow.

Interview by Chadaphan Maliphan, GTCC Publications and Communications Manager