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.
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?
Membership is free and takes no more information than commenting as a guest. Earn status points for good contributions, and see fewer ads as your status grows.