Lufthansa, like many of its European counterparts, is suffering. A world wide slump in the fortunes of the travel industry have hit the airline hard, and it is currently in the throes of cutting back on ambitious property development projects it had planned around the world, to concentrate on becoming more financially trim.
However, there is one oasis for Lufthansa, where demand is swelling every day and where the outlook is sunny ? China. In 1992, the increase in passenger levels was 55 per cent ? so large, that the airline decided to add a fourth flight to its schedule on its Germany-Beijing sector in October of that year. Now, with demand rising by 75 per cent for the first five months of 1993 over last year, four flights are already too few, and a fifth is scheduled to begin operations in October of this year.
Lufthansa's China property project ? the Beijing Lufthansa Centre (see page 24) was the only overseas venture of its kind to be spared the axe during the recent cutbacks. And its AMECO (Aircraft Maintenance and Engineering Corporation) facility, in which Lufthansa owns 40 per cent and Air China holds a controlling 60 per cent, is the largest joint venture in Beijing.
Gustl Scheuermaier, general manager of Lufthansa China, puts the "tremendous" growth figures, down to a number of factors, not least of which is the airline's image in China.
"We were the only airline after the events of June 1989 which decided not to cut down our operations from our three flights, like other airlines did." This, he thinks, was a vital decision. "We were there, when others were not. A good partnership should be done like this ?both partners should have some profits from it."
The airline's. profile has been further boosted by the completion of the Beijing Lufthansa Centre, whose department store is already well known in the city. Awareness among the Chinese of the Lufthansa name is becoming increasingly important, says Scheuermaier, as more and more are starting to travel to Europe on business. It is still too early to scoop Chinese. tourists for the route, as those who are travelling for pleasure are so far only focusing on destinations closer to home in souteast Asia, but it is an area that Scheuermaier is confident will develop "sooner or later".
German interest in China is inevitably of utmost importance, in tourism and
business. Initially companies were slow to catch on, with only a few of the big names making substantial investments in the country ? Volkswagen and Siemens, for example. Now that Germany has its own economic problems, the interest is rising.
"Due to the fact that we have problems," says Scheuermaier, "we have to look to other markets. Companies are now looking for other bargains and they can see that there is a big market in China. That is why our business and first class sectors are overbooked."
Scheuermaier thinks that the fact that the airline continues to run a first class service, where many others don't, is important for business. Likewise, he justifies the airline's "slightly more expensive" prices by saying that the customer is paying for a "product of quality. From our point of view, we think it is better to fly at say 70 per cent load factor, instead of 90, but have more in the cash box."
With its presence in Beijing by all accounts, firmly established, the airline is planning to expand further by operating flights to Shanghai. Through a joint venture with Air China, it already flies a cargo freighter on the route, but is now looking at the passenger sector. As talks are still under way, nothing is yet decided, but it is thought that there may be more than one flight in the offing. We say only once is nothing," smiles Scheuermaier. "Twice is better." *
Lufthansa German Airlines, Beijing Lufthansa Centre, 50 Liang Ma Qiao Road, Chaoyan District, Beijing 100016, China. Tel: +86465 3500, Fax: +861465 3223.
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