Lufthansa dumping NetJets ?!

[Stratocaster]

Lufthansa Private Jet on course for success
Growing demand for premium service – Special fleet to be built up in 2008
Two years after the introduction of the Lufthansa Private Jet (LPJ), demand for individual, flexible air travel is so strong that Lufthansa is expanding its premium service. The company is investing in its own private jets to augment the existing Lufthansa Private Jet service. The new aircraft will be purchased next year and fitted with exclusive interiors. Lufthansa’s own jets are expected to go into service in spring 2008.
By building up its own Private Jet fleet, Lufthansa will be in a better position to tailor the product to customer requirements and also offer a more flexible service. “Customer demand for the Lufthansa Private Jet has risen steadily in 2007 and at times outstripped capacity,” said Thierry Antinori, Executive Vice President Sales and Marketing, Lufthansa Passenger Airlines. “The continued growth in demand shows us that our customers want a top-quality Lufthansa service. By creating our own Private Jet service, we are broadening our product portfolio, and we will thus be able to offer customers a full range of services from one source: from reasonably priced fares such as betterFly through to flexible, exclusive trips with the Lufthansa Private Jet.“
Based on the excellent market response, Lufthansa anticipates steady growth in this segment. Today 70 per cent of all LPJ passengers fly point-to-point within Europe. Thirty per cent of customers use the LPJ service to connect directly with onward long-haul flights operated by Lufthansa or SWISS via Frankfurt, Munich or Zurich. With its innovative approach to linking scheduled flights and Private Jet flights, Lufthansa has increased its ability to attract potential customers, particularly in the premium segment. Customer satisfaction ratings for this premium service remain consistently high at over 90 per cent. Product innovations – such as the introduction of the worldwide limousine service to and from the departure airport or access to the First Class facilities at Frankfurt, Munich and Zurich - have guaranteed constantly high customer satisfaction levels. Equally, customers appreciate the intensive and customer-oriented service provided by Lufthansa’s special service teams.
As Lufthansa is setting up its own LPJ service, cooperation with the previous provider NetJets Europe will cease in February 2008. Until the fleet has reached the required size for 2008, individual LPJ flights will be operated by partners certified by Lufthansa.
In March 2005, Lufthansa became the first international carrier to offer a private jet service in the premium segment. Point-to-point flights between as many as 1,000 destinations within Europe and the Russian Federation plus individual, seamless connections to Lufthansa’s international route network complement the extensive scheduled services operated by Lufthansa and Swiss. Flights are offered at a fixed, all-inclusive price. Members of the Lufthansa Miles & More frequent flyer programme are awarded 10,000 miles per flight leg. For detailed information, please visit our website at http://www.lufthansa-private-jet.com.
Deutsche Lufthansa AG Corporate Communications 07.12.07
Could someone explain me how that would be feasible? :confused:

[jamesarmstrong]

anyone know what lufthansa are buying? orders must have been placed some time ago if they expect them to be delivered in Spring 08...?

[crjlover]

I don't know which type they have bought. But at the last traffic meeting held in frankfurt, the told that: lufthansa private jet, didn't reached the expected target. It was born as premium-feeder for the long haul flights, but most of the customer use is for point-to-point flight skipping the LH flights. So the creation of a their own private can be a good decision.

[FourGreenNoRed]

This is out of a German Newspaper and obviously the other side of the story. Probably influenced by the NTA press team, but closer to the truth:



Lufthansa without Warren Buffett The airline can no longer fall back on the private jets of the billionaire. This is bad news for the wealthy customers. It was so far a beautiful success story: the history of Lufthansa¹s private jets for the successful and rich people among the frequent flyers. Individuals who wanted to go from Erlangen to Rotterdam and who at the same time were willing and able to pay for, were provided by Lufthansa with a Cessna Citation Bravo, a Hawker, a Beechcraft or a Falcon * at the latest 24 hours after the order. This service has existed since March 2005 connecting remote airfields in the European and Russian province with large airports. 1000 destinations can be reached. This service is the perfect fit for the strategy of Lufthansa to provide for each of its passengers tastes. Financially strong customers are especially important to the company as they travel much and on long distances. "A great product", jubilated head of Lufthansa Wolfgang Mayrhuber. But now the fun is over. Because Lufthansa partner NetJets terminated the contract.

NetJets is a branch of the economic empire of the investor Warren Buffett and the largest private jet company of the world. It made its aircraft available on behalf of Lufthansa. The termination of the contract, which NetJets already expressed at the end of August, has now been communicated by Lufthansa with the joyous heading: "Lufthansa Private Jet on a course of success - demand for premium offer rises * Building up of an own fleet in 2008". This successful course however, according NetJets, ends 11th of December. Lufthansa then will have flown off the hours they bought. And NetJets will not to lift a finger for Lufthansa after that day. It is now open, who will fly Lufthansa¹s premium passengers. "We are in negotiations with other companies", says Lufthansa. But these are not yet finished.

At the same time, Lufthansa states that the contract is still valid until February 2008. NetJets confirms that this is correct if Lufthansa hadn’t already flown the number of flying hours that they had purchased. The Airline (LH), obviously the victim of its own success which does not make the situation easier. Departure is in danger from 11 December on. Lufthansa will buy an own fleet, but this one will only be ready in spring 2008. "Until the moment we are reaching our planned fleet size for 2008 single flights will be accomplished by Lufthansa-certified partners", writes the company.

My call at the service team of Lufthansa Private Jet does not clarify the situation. "Whether a flight will be possible on 8 January? I can only accept and process the order ", says the friendly voice of the service team. There are no guarantees. A few fundamental questions arise. Time and time again, large airlines tried to establish as supplementing offer private jet flights for their wealthy customers. So far, the attempts always failed. Why NetJets is no longer cooperating with Lufthansa is a little unclear. The company wants to concentrate on the core business, says NetJets. The co-operation with Lufthansa contributed only one per cent to the revenue.

The Lufthansa co-operation could mess with their own business. "Fractional ownership" as their own business is called is very successful: The company sells shares of an aircraft or flying hours to companies and private people, which thereupon can fly to 1,000 European destinations, with only 24 hours notice. With 600 aircrafts worldwide, of which 130 are in Europe, the company operates the largest business-jet-fleet of the world. Business jet flights are booming in Europe. Operators are buying aircrafts and are looking for pilots. NetJets recently increased salaries for flight captains, in order to reduce the fluctuation.

[falconbis]

most probably but DCA doesn t haveenough airplane to cover Lufth demand with 24 hours notice , the reason Lufth sign with Netjets 3 years ago was base on fleet availability, only Netjets size could cover that demand.It is possible that Netjets think that they will get the Lufth customers now that they had a taste of the service they offer ...

[Der_Fischmeister]

mhh jjhjhjhjhhj

[falconbis]

No offence but I doubt....may be some aircraft are in order or waiting for delivery but there are not there ready to flight, average flight made by Netjets for Lufth was 10 revenue flight a day some on large cabin long range flight like Cabo Verde -Tasken, don t forget that you have to had the positionning to the revenue flight and those positionning was not charge to Lufth, most of flight were point to point not FFM or MCH departure so you have to position where is the customer for free...its a huge challenge believe me..Netjets have a different business model and 130 airplane, its a different game if you need the revenue money to pay everything plus the capitalisation of the airplane...I don t think is feasible!

[blablablafly]

LH is trying to be everything for everybody.... From LOCO to biz jet.I think BA is smarter by concentrating on what they do best..

[2604]

those positionning was not charge to Lufth

No but the revenue leg is charged twice what it should be.

[falconbis]

:=not at all, if you buy a card then I agree with you, but Lufth bought quite a large quantities of shares year and a half ago, so they are charged operating cost by Netjets like all owners and ONLY on revenue leg NOT on ferry. Of course someone have to pay for the positionning and in the Netjets business model its a fraction of those cost which is included in the customers monthly management fees...so its completly painless for those owners (they don t even know) quite different if you are a charter company, if you don t charge the customers you go burst and if you do so you are twice more expensive than Netjets...How Lufth is going to maintain the same pricing than before to their owners and have DCA to make a living is impossible unless 1. they decided to lose money but use the service as a marketing tool ! 2. they increase the price of the service by at least 50% and then Netjets is going to get most of the Lufth customers...interesting to see what is going to happen !!

[2604]

Falconbis, I won't disagree with you as I do not know enough about it. I was just quoting an ex-Netjets customer who realised that Netjets was double the price compare to a charter operator. I guess he wasn't an owner then just a card flyer.

As far as Luftansa is concerned good luck to them. I understand what you're saying but if a small charter operator can be successful with small financial means why not Lufthansa?

Wasn't Virgin thinking of doing the same thing? I remember reading something along those lines in the papers a while ago.

[falconbis]

I think ( but I may be wrong)that the success of Luth on this program was base on Netjets ability to sell and charge Lufthansa point to point outside FFM, MUN, and COL ! Lufth demand explosed not on the initial idea of selling a Los Angeles Sion by flyinf Lufth L.A FFM then Netjets FFM Sion...in fact the business developped by doing point to point flight without using at all Lufth airplane but only Netjets capacity to deliver that kind of service and not charging Lufth for positionning flight...that s I believe is the beauty and unbeatable of the Netjets system. Now of course a little charter Company can be successfull but how to price a flight to Lufth from Larnaca to Gerez if this Company is base in Germany and have to ferry to Larnaca et ferry from Gerez to home... Lufth would want to pay only the revenue leg or the ticket price will rocket up and those Lufth customer will ask why with netjets it was lots cheaper....and I believe that Netjets anderstood this and back off, Lufth flight represent only 1% of the total flights of Netjets and they probably think that Lufth will not be able to match their pricing policy and get back their customer soon or later !
yes Virgin United and even AF have been looking at it but no one dare to start a similar program except United (after Netjets US refused United alliance demand) then United cancel everything after sept 11 and dive in chap 11 while Netjets was posting profit and double digit growth !!

[2604]

then United cancel everything after sept 11 and dive in chap 11 while Netjets was posting profit and double digit growth !!

Yes some businesses make success to the detriment of some others.

So perhaps one way for Lufthansa to be succesful with this idea would be for them to develop the idea with other companies like AF, Virgin, United and the likes and have a presence worlwide (meaning less ferries).

Anyway I'm only a driver. If I had the right business ideas I wouldn't be typing those posts from a cheap hotel room.

[falconbis]

may be ...it will be interesting to see what is going to happen !

[blablablafly]

So perhaps one way for Lufthansa to be succesful with this idea would be for them to develop the idea with other companies like AF, Virgin, United and the likes and have a presence worlwide (meaning less ferries).
What are you smoking? :hmm: These guys compete like hell with one another so why would they start becoming friends on a side business for them:confused:

[2604]

What are you smoking? These guys compete like hell with one another so why would they start becoming friends on a side business for them

Whatever! :cool:

[Stingaling]

In layman's terms, why was LH or NJE dumped? Any NJE top guns like to comment?

[FlyMD]

I see a very different problem for this kind of cooperation: anybody of you try to get an airport slot in EDDF these last few month?

We operate a customer out of there and find ourselves deviating to Baden-Baden on a regular basis because we are not granted an Frankfurt airport slot within 2h30 of our requested time!

And this is LH's home base...

[falconbis]

Stingaling

I think we did ..