Lufthansa looks to Africa
Joachim Steinbach, vice president for passenger sales and services for Africa, the Middle East and Southeast Europe, speaks highly of Lufthansa’s partnership with Ethiopian Airlines. He sees stronger co-operation with local airlines as one of the best means of boosting the Lufthansa Group’s presence throughout the continent.
For more on African airlines push to create regional partnerships, read Flying high, side by side.
How do you see Africa fitting into your larger, global business?
We have had a very strong focus on Africa over the last couple of years, which is very good. I cannot say that it was neglected for a couple of years, but I think that Lufthansa was more known for focusing on the northern hemisphere, the US, China, and India. Maybe due to historic reasons, Africa was never on the top of the map. We have learned from our competitors. We have seen that the continent in general has very strong economic growth and development and has become very important on a global scale, and that is the reason we have increased our focus on this continent.
Nigeria is one of the biggest markets in Africa. How do you see the situation with Virgin Atlantic, Virgin Nigeria and the emergence of Arik Air playing into your operating model?
Let’s put it this way: all of these airlines, as far as I know, have a different focus. They are operating out of bases in Nigeria for domestic traffic and inter-Africa traffic, and for a couple of intercontinental destinations. Virgin Nigeria and Arik are start-up companies that are, I think, nicely managed. I have no idea about their profitability, but I like the idea that Nigeria has a strong domestic airline and strong domestic traffic. Our focus is a bit different, seeing as we are international connectors. We go to Europe and connect Nigeria to the world via our hubs in Frankfurt and Zurich and so on. So I would say the stronger a domestic airline’s business is, then the better it is for the country and also for us, because then you can move people freely within the region to certain hubs. We have the means to connect internationally with our hubs of Lagos and Abuja because it is a fantastic network. We are not against strong Nigerian airlines, in fact, we welcome them.
So, in Nigeria and elsewhere in Africa, your main competitors remain other European carriers?
In Western Africa I would say yes. In the rest of Africa, there are also non-European carriers. In Eastern Africa, Emirates are getting stronger and stronger. We also have Ethiopian Airlines in Addis Ababa, and this I would say is the perfect example of how we cooperate with a strong local airline. We would be happy to see the same scenario in Western Africa. We fly to Addis five times a week non-stop from Frankfurt. They have access to Europe on our flights and we have access to seven or eight countries in Eastern Africa on Ethiopian Airlines flights. And by the way, Ethiopian is engaging itself in Western Africa, also.
The new flights into Pointe Noire and the direct flights into Libreville ended the dominant monopoly of Air France. How do you see that affecting the price of flights into those countries from Western Europe?
First of all I would like to say that we are not going head to head in competition [with Air France]. We do not talk to each other due to compliance reasons. The day-to-day work as a new carrier like Lufthansa in Port Noire means that you have to turn over every stone, every customer, every corporate client and so on. The idea is not for us to come in as price breakers; we want to offer service, quality and alternatives. Based on that, I think that the eventual price is a natural reaction of what the customer is prepared to pay. I have seen in this relatively short time that we are welcome and that customers love having the alternative of Lufthansa. Nobody likes monopolies, and that is how we saw it. Of course it may have an impact later on, but it is too early to think about that and we just want to establish the brand and work for the trust and confidence of our customers.
Across your business in Africa, are your customers mainly European businessmen?
It’s a good mix, I would say. There are not too many tourists. It is more business related. Flights in and out of Africa, workers and managers of international companies: these are our customers. There are also local people who travel to Europe and the US, Nigerians, government officials. It’s a good mix compared to other markets. If you look at a route from Africa to Toronto in the summer time, it’s all tourists, so we always have a good mix of visiting friends and relatives from around the globe.
Has the growing middle class in many countries in Africa had much of an impact on your company?
I would say yes, actually; they are among our customers. I see the trend heading upwards. It is very evident that the growing middle class in Africa has travel needs. They have family sometimes outside the country, maybe holding dual citizenship somewhere else in the world. They have lots of reasons to travel and we will welcome them on board.
Do you want to replicate the North American, rather than the European model in Africa? That is to say, short-haul flights would be made with local partners, and you would not get into the business of running a local airline within Africa.
No. As I said, we now have good cooperation, especially in Addis Ababa. But where there is a good local airline available with a good network, like Ethiopian Airlines, then we connect their hub to others and distribute passengers on their network. But we have no plans to do it on our own; for one thing, regulations don’t allow for it. Imagine a Nigerian or a Congolese company opening up a company in Germany and doing domestic business; nobody likes this idea. The same thing goes the other way around. With a local partner and a local network working together, it is beneficial for all.
As you have said, in Africa, the draw is still oil and gas hubs. Do you see that changing any time soon?
I don’t. I think I see it becoming stronger and stronger. There might be many more oil driven destinations in Africa that are oil and energy related.
How many destinations do you have in Africa right now?
We have 18 destinations. The Lufthansa Group has 35.
How many do you foresee having in 10 years?
Double that. I’d say at a minimum, 50% more, but possibly doubling the business in 10 years. That is a very conservative estimate. We are not talking about Lufthansa alone. We have Lufthansa and Brussels Airlines and we are now starting to create a job share between them. I would say one should open up the destination in Conakry as Lufthansa. Where the traffic is French-speaking, Brussels Airlines is fine – they cover 50-60% of the business.
Do you not work with any local airlines in East Africa?
We work with Ethiopian. KLM and Kenyan Airways have combined forces and they have chosen Nairobi as the hub for East Africa. They have flights between Amsterdam and Nairobi: very strong routes. Kenya Airways is building on its own network all over Eastern Africa. Then we said, “okay, we have to do the same thing but with Addis Ababa”. Now with our partner Ethiopian Airlines we are competing against them. So we would not fly into Nairobi right now. It’s like a fortress that they have surrounded so we are just firing small arrows. It’s a strong fortress but we are building up a new hub with a strong partner in Addis and so drawing traffic with a better product and better connections. This is our partner and if we could find such an airline elsewhere –in Nigeria for instance – that would be perfect. That would be a clear message to the Nigerian government or whoever runs the business. If there would be a Nigerian airline that connects all West Africa, including Central Africa, into a hub in Abuja or Lagos that we could support with international connectivity, that would be great.
My colleagues based in Lagos fly here [Pointe Noire, Congo-Brazzaville] by flying to Addis, then from Addis to Brazzaville and then on to Pointe Noire on Ethiopian Airlines. They are forced to fly 20 hours across the continent because there is no airline in Western Africa that can go from here to Lagos, which is only a two- to three-hour flight. That would be our pledge, demonstrating the willingness of Lufthansa to cooperate with partners. As we do in East Africa, we want do the same in West Africa. If Arik or any other airline is strong enough and professionally managed well enough it would be lovely and perfect to work together.