Lufthansa Chairman and CEO, Carsten Spohr wants to bring emotion back to an industry that should be proud of its performance
In brief: Carsten Spohr
Spohr has been at Lufthansa since 1994 in a variety of roles, including leading the cargo arm before taking on the Group Chairman and CEO position in 2014
Building a career
Born in Wanne-Eickel in the west of Germany, he holds a degree in industrial engineering from the University of Karlsruhe
Leading the way
A keen pilot, Spohr holds a Lufthansa Captain's license for the Airbus A320 family of aircraft
For quality growth to take place, the cooperation of partners across the board, including airports and air navigation service providers is needed, and within the context of sustainability. But the industry’s track record suggests it is achievable.
What are your expectations for 2019?
For a European carrier, there are two sides to the story. Commercially, I am much less pessimistic than some of my peers. Even though there is less growth than in recent years, the market continues to perform well. There will be no major changes in the positive trends we have witnessed.
But operations in Europe are a challenge. In summer 2019, we will do better than we did last year in dealing with delays and congestion, but unfortunately it still won’t be good enough. We can already foresee that the capacity of air navigation services and on the ground won’t be sufficient to deliver the quality level needed to meet passenger expectations.
We will do what we can to alleviate the problems. At Lufthansa, we are increasing the reserve fleet from 22 to 27 aircraft and we are hiring an additional 600 staff for operational resilience and customer service.
How should the industry tackle the capacity crunch in Europe?
I don’t regard it as a capacity crunch but rather as overcapacity in the market. The industry needs quality growth and not what I call blind growth. Some airlines are not being rational in their business model. Selling tickets for €9 is not a sustainable model for any airline and so that growth also falls outside the remit of environmental responsibility.
Of course, it is true that the Single European Sky has not progressed at all and some key airports haven’t been developed sufficiently. But I think that the horrendous delays in Europe last summer forced people to wake up. Airspace needs a new structure and new technology is needed to help air traffic controllers. More automation will help them to handle the growth in air traffic demand.
I would like to see the industry partners join forces to bring back the spirit of aviation. This is a unique industry that does a lot of good and we should all have more pride in what we do
It is important that we align the tools available to airports and air navigation service providers to improve their ability to handle more flights and more passengers. There has to be synchronized development. A new runway is no help if the airspace above the airport cannot handle additional flights. And there is no point in a better airspace structure if people don’t have room to move in the terminals or miss their flights waiting in the queue in front of security checks. The point is it can’t be growth for growth’s sake. All aviation partners need to be involved in the discussion on how to achieve quality growth.
What would a good European aviation policy look like?
Aside from dealing with the infrastructure issue, we also need to look at air traffic agreements to make them fairer. The World Trade Organization has done this for many other industries for many years. Aviation needs to adopt the WTO approach to avoid distortions and disparities. Traffic right agreements need to reflect a good balance between openness and fairness and regard the principle of reciprocity.
We also need more balanced consumer rights regulations. Often the compensation due is higher than the cost of the ticket. That needs to be addressed. And there is much more that can be done for the environment. Our passengers, our staff, and our shareholders all want even greater environmental efforts.
Do you think the Carbon Offset Reduction Scheme for International Aviation (CORSIA) will help airlines to win the environmental PR battle?
The industry can be very proud of CORSIA. Aviation has acted and done something that other industries are still talking about. It is a great example of what aviation can achieve and sets a good benchmark for our efforts in other areas, like infrastructure.
But we can always do more. We still don’t fly in straight lines and follow air corridors from the 1960s. And we burn even more fuel and cause unnecessary emissions because of endless holding patterns and queues on the taxiways waiting to get to the runway for take-off.
Is the airline-airport relationship good enough?
In general, the airline-airport relationship is a major challenge. An airport is driven by volume. Basically, the more passengers it handles, the more money it gets. But airlines should be more concerned with yields and quality growth. We are driven by different business needs.
There is also a structural problem with privatization. Most airports are monopolies and the regulations accompanying privatization aren’t strong enough.
The relationship between individual airlines and airports can be excellent but at an industry level there has to be a better understanding.
1953: Lufthansa traces its history back to 1926, but the creation of a new German flag carrier after WWII saw Luftag founded in Cologne on 6 January 1953. In 1954, Luftag acquired Lufthansa's branding rights, and on 1 April 1955 the rebirth was complete as flights left Hamburg and Munich to start a new era for German aviation
What are the advantages of being an airline group and do you see consolidation as a positive trend in the airline industry?
It’s obvious that for a healthier industry we need fewer players. Look at what has happened in the North American market. But maintaining the individual or national identity of airlines is still very important for many reasons. This is where an airline group helps because within the structure there is room for individual brands.
And those individual brands in turn help the airline group to have both size and speed. Giving the power to local management means they have the freedom to act, they make their own decisions. But at the same time the airline group as a whole brings economies of scale, it reduces cost, improves the customer offer, and has more political influence.
Lufthansa has a big recruitment campaign in 2019. How will you use this to tackle the issue of diversity?
There is some wonderful technology in this industry, but the difference is always made by people. It therefore makes sense to encourage diversity in staff to ensure that customer service and management benefit to the maximum extent. Airlines in general are doing a good job. They should be confident of that fact.
Working for an airline is attractive to all sorts of people, including millennials. They want to know the purpose of the industry in which they are working. And aviation has a great answer. It makes the world a smaller place and brings the social and economic benefits that implies.
I often recommend watching the movie Living in the Age of Aeroplanes to job candidates and junior staff members. This movie makes it so obvious how fascinating aviation is. All I can say is that the Lufthansa application pipeline is full.
There is wonderful technology in aviation, but the difference is always made by people
Does technology have a role to play in improving the customer experience?
There’s no doubt that technology is incredibly important. At Lufthansa, we have spent hundreds of millions of dollars on the digital experience and billions on the aircraft themselves. But even speaking as an engineer, I have to admit it is about people. Technology just allows people to make more of a difference.What do you see as the biggest opportunities and challenges for aviation in the years ahead?
The greatest opportunity is what the industry does. It brings people together and enriches lives. There is also plenty of scope for improving the efficiency of how we do this, as we have talked about earlier.
In terms of challenges, I think I have to talk about environmental responsibility again. The point is we have to prove we can do all of these things I have mentioned while taking care of the environment. Although we have done a lot of work, we are only just seeing the beginning of this challenge.
600: We are hiring an additional 600 staff for operational resilience and customer service
€9: Selling tickets for €9 is not a sustainable model for any airline and so that growth also falls outside the remit of environmental responsibility
It’s obvious that for a healthier industry we need fewer players, but maintaining the national identity of airlines is still important
If you could change one thing about the industry tomorrow, what would it be and why?
I would like to see the industry partners join forces to bring back the spirit of aviation. This is a unique industry that does a lot of good and we should all have more pride in what we do. Rather than let politicians talk about limiting the industry we should be talking about the limitless potential of the industry to have a positive impact on the world.