In 2021, Lufthansa eliminated free drinks and snacks in short haul economy, in a move that reportedly saved the airline $0.66 per passenger. Obviously passengers haven’t been happy about this change, and several months ago, the airline ran a trial, whereby it reinstated free coffee and tea in short haul economy.
Following the trial, what are the odds of more service being restored in short haul economy? Not great, apparently, as Lufthansa Group’s CEO isn’t sure if the company can afford to offer more service in short haul economy, as reported by Spiegel Business.
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Lufthansa CEO comments on short haul service
During a town hall with employees this week, Lufthansa Group CEO Carsten Spohr was asked about the possibility of more service being restored in short haul economy, following the trials several months back. Spohr’s response is pretty telling.
Spohr reportedly answered that the airline only earns an average profit of around seven EUR per passenger, and even spending one extra EUR per passenger would therefore eat up one-seventh of the company’s profits. He also commented on how it’s not just about the cost of the coffee, but also about the reduction in sales that the airline would see.
He (rhetorically) posed the question of whether and to what extent the airline could afford this. Let me also clarify that this isn’t a mistranslation, or anything (“Man müsse sich fragen, ob und in welchem Umfang man sich das leisten könne”).
So I think it’s safe to assume that Lufthansa isn’t planning on restoring service in short haul economy, or at least that this isn’t the most likely outcome.
In fairness, Lufthansa isn’t the only “full service” airline in Europe with such a policy. Quite to the contrary, it has become the exception rather than the norm. While Air France and KLM still have service on short haul flights, the airlines are reportedly testing cutting this in 2025.
Spohr’s logic is deeply flawed
My thoughts on Spohr are no secret — I think he’s one of the least competent senior leaders in the industry, and I don’t understand how he has been in his role for so long. Let me be clear, I’m no Lufthansa hater. Quite to the contrary, I want Lufthansa to be successful and competitive.
But I just feel like Spohr does very little right, from labor relations, to passenger experience. And he does it all with such arrogance, with his comments almost sounding like those of a neutral observer, rather than him acknowledging what’s happening under his leadership.
I can’t help but point out how terrible Spohr’s logic here is. “Well we can’t afford to invest a buck into each passenger, because that’s 14% of our profit margin.” That’s… not how that works. Does Spohr really think that for every dollar you invest in passengers, one dollar comes out of your profit margin?
I mean, it sure would explain a lot about how he runs the company. I suppose it’s actually quite consistent with the approach he has long taken. Spohr thinks the key to running a successful airline is to focus on keeping costs as low as possible, rather than focusing on increasing revenue.
Like, the airline has no issues trying to charge $599 for a 162-mile flight from Munich to Zurich. But a passenger wants a cup of coffee? C’mon, passengers, don’t get so greedy!
Airlines around the globe have shown that focusing on premium revenue rather than cutting costs at every possible corner is a great way to succeed, whether we look at Delta or United in the United States, Emirates in the Middle East, or Singapore Airlines in Asia (not that those airlines are all equally “premium”).
What makes this all the most offensive is how Lufthansa has such little competition from ultra low cost carriers in Germany, and it’s one of the reasons the airline is actually able to command decent fares on short haul flights.
In fairness to Spohr, he actually is a very consistent guy. Several weeks ago, he shared his vision for making Lufthansa great again. He described Lufthansa as the airline group’s “problem child,” and said that it’s “a clear goal that the Lufthansa airline will once again be our flagship for its 100th birthday in 2026.”
But then Spohr went on to talk about all the ways to make the airline group profitable, which involves outsourcing Lufthansa flying to other, lower cost carriers:
- Lufthansa Group has acquired a stake in Italy’s ITA Airways, and Spohr hopes that this will help the airline boost margins and strengthen revenue, as the airline has a lower cost structure than Lufthansa
- Lufthansa wants to expand in regions like Africa and Latin America, but it doesn’t seem like Lufthansa actually wants to do that with its own aircraft; Lufthansa Group has outlined plans for both Brussels Airlines and Discover Airlines to get more jets, for these kinds of routes
Bottom line
Lufthansa Group’s CEO doesn’t seem confident about the prospect of the airline restoring more service no short haul flights, after introducing buy on board a few years ago. He argues that if the airline spent an extra EUR per passenger, that would be 14% of the carrier’s profit margin, given that the airline earns an average profit of seven EUR per passenger.
That’s not terribly sound logic, but then again, at least Spohr is consistent with his “logic.”
What do you make of Spohr’s comments about Lufthansa’s short haul service?
Would you pay more money for the ticket if they offered free coffee? Most customers will still book if it's the most affordable or best schedule
Could be worse - they could be in skyteam
And yet they are an anchor of Star….
5 Starhansa campaign under Spohr was such a diaster, allegris flooping for 6 years.
Funny, when I read the article in Spiegel about the disaster of the business class seats for the 13 (and counting) B787 which are sitting in Charleston a few hours ago, I wondered how Spohr managed to still have his job. The whole Allegris disaster really is beyond ridiculous. The product of LH is completely outdated and all Spohr does, is to complain - about employees, about the Middle East Carriers and it goes on...
Funny, when I read the article in Spiegel about the disaster of the business class seats for the 13 (and counting) B787 which are sitting in Charleston a few hours ago, I wondered how Spohr managed to still have his job. The whole Allegris disaster really is beyond ridiculous. The product of LH is completely outdated and all Spohr does, is to complain - about employees, about the Middle East Carriers and it goes on and on and on..... It's always someone else's fault.
I believe (and hope) he must be in a hot seat. LHs largest shareholder recently made a clear remark that he is not happy about how the company is run. And that guy is known to be unpleasant or rather quite brutal when things don't go the way he appreciates.
How does he still have his job? A dividend yield of 3.7%, paying €0.30 per share. For an airline group that's rather impressive. The board aren't going to fire him if the stockholders are happy. Profit is why they're in business.
@Ben, it'd be nice to read your thoughts on Spohr's comments about LH not making that much profit from business class. As an average flyer, I have frequently encountered the idea that a flight is profitable thanks to passengers in premium cabins. Also, considering that LH's F is sort of the "affordable" F cabin out there (relative to other airlines and award availability), I can't help but think that this cabin doesn't bring a more...
@Ben, it'd be nice to read your thoughts on Spohr's comments about LH not making that much profit from business class. As an average flyer, I have frequently encountered the idea that a flight is profitable thanks to passengers in premium cabins. Also, considering that LH's F is sort of the "affordable" F cabin out there (relative to other airlines and award availability), I can't help but think that this cabin doesn't bring a more substantial profit either. So, if profits from business class are "meh" and coffee for passengers "unaffordable", how does LH make a profit and where does it come from?
CHEAP nasty airline
Spohr is so tight, he squeaks when he walks. And when he talks.
Kudos to him for turning a once world-class airline into a parody of corporate culture.
It's interesting to hear that they can't afford black coffee or tea for passengers but they can afford flying a entire section of a plane (with probably many more on the horizon) without actual seats (and without paying passengers, of course) :D
Lufthansa has consistently been embarassing and disappointing on a national as well as international stage.
From being bailed out by the government during covid to then cutting and outsourcing thousands of jobs; to now wanting to buy a stake in ITA to then stating they can't afford "free coffee" (is it free when you paid for the damn ticket?) and lastly the terrible performance, they just keep getting worse.
The constantly try to...
Lufthansa has consistently been embarassing and disappointing on a national as well as international stage.
From being bailed out by the government during covid to then cutting and outsourcing thousands of jobs; to now wanting to buy a stake in ITA to then stating they can't afford "free coffee" (is it free when you paid for the damn ticket?) and lastly the terrible performance, they just keep getting worse.
The constantly try to get out of payments according to EU passenger rights (can attest to that myself), making up ridiculous stories for being late. Their business class product is dated and way overpriced and the whole hullaballoo around their new (already dated) business class is just the icing on the turd cake.
As a German I miss Air Berlin everyday.
I can't afford to pay LHG's ridiculous fares for a low-cost service when AFKL offers full service product (for now) at a lower price. Such is life.
Writing from North America, we ave a different view of “short haul.” Seattle to Vancouver is booked as one hour, with 42 minutes flying time. On a recent flight, in first we got a choice from 2 or 3 drinks before take off, no service in the air. But flying 2 hours in business on LH from Helsinki to Frankfurt this year, I got a very nice 3-course meal with drinks offered 3 times. When...
Writing from North America, we ave a different view of “short haul.” Seattle to Vancouver is booked as one hour, with 42 minutes flying time. On a recent flight, in first we got a choice from 2 or 3 drinks before take off, no service in the air. But flying 2 hours in business on LH from Helsinki to Frankfurt this year, I got a very nice 3-course meal with drinks offered 3 times. When I expressed my astonishment at the level of service on such a short flight, the FA laughed and told me that was a long flight for them. Their short haul is really short, and Alaska, at least, offers nothing in economy on flights like that.
Nice meal on Lufthansa? That would be first :) Surely a three course meal is a bare minimum on a two hours flight? There's not much they can cut at that point, unless they want to go the US way of serving peanuts in premium cabins.
For that flight to Zurich, you'll probably spend at least 2 hours getting to and from the airport/going through security, flying the flight, etc. You could spend 4 hours and a fraction of the cost to simply take the train from Munich to Germany.
If it costs them $1 per passenger for coffee they are doing something wrong.
“an average profit of around seven EUR per passenger”. I unfortunately have to book incredibly expensive last minute economy tickets for my clients. 3K for Y FRA - US is not uncommon or 1K intra-EU flights in eco these days.
How is that €7 profit measured? I really don’t get it, even booking early, intra-EU flights are easily €250+ nowadays on legacy carriers. Double from pre-covid.
If a cup of coffee is too expensive...
“an average profit of around seven EUR per passenger”. I unfortunately have to book incredibly expensive last minute economy tickets for my clients. 3K for Y FRA - US is not uncommon or 1K intra-EU flights in eco these days.
How is that €7 profit measured? I really don’t get it, even booking early, intra-EU flights are easily €250+ nowadays on legacy carriers. Double from pre-covid.
If a cup of coffee is too expensive for the airline, perhaps cut the CEO’s salary, you can get millions of cup of coffee’s for that.
It's calculated as profit divided by number of passengers. The result used to be 15€ per pax before Carsten blew 350 million on strikes. Lufthansa could serve 22 coffees to each passenger if they hired a competent person to run the airline.
Well he is talking profit, not revenue. But I still find it strange as well. Then he aslo says business class doesn't make much profit. If you follow his logic, lufthansa should opperate as a not for profit...
this is why I like Ben
"My thoughts on Spohr are no secret — I think he’s one of the least competent senior leaders in the industry, and I don’t understand how he has been in his role for so long. Let me be clear, I’m no Lufthansa hater. Quite to the contrary, I want Lufthansa to be successful and competitive."
we all have our heroes and villains.
LH is the flagship of the...
this is why I like Ben
"My thoughts on Spohr are no secret — I think he’s one of the least competent senior leaders in the industry, and I don’t understand how he has been in his role for so long. Let me be clear, I’m no Lufthansa hater. Quite to the contrary, I want Lufthansa to be successful and competitive."
we all have our heroes and villains.
LH is the flagship of the group and it is in the biggest mess and seems least able to get itself out of said mess even while its competitors outstrategize LH.
Indeed, Ben is a Lufthansa LOVER. Perhaps that's not even strong enough of a word. Yet, Ben calls a spade a spade (which is an ancient Roman expression, unrelated to race).
Relax Fred. Anyone who is offended by your example is ignorant and deserves to be ridiculed, not feared.
Best we can do is free Britney...
So the free stuff for everyone isn’t fun anymore ? The price of arabica coffee beans went up 72% this year. Wah wah wahhhh
We offer complementary beverages. Additional alcohol and coffee drinks may be purchased.
@ D3kingg — To be clear, soft drinks aren’t free either. The idea was that coffee and tea would be the lowest cost thing to bring back, since you can use water from the plane’s tanks.
Found Spohr's burner
But you will still fly them in first class and write about it
@ JPP — Yes, using miles, when it’s the best value. Not sure what’s wrong with that/what your point is?