Lufthansa Innovation Lab Takes Off In Asia With Singapore As Its Base
In 2014, Lufthansa opened a digitization and innovation unit that would cater to the increasing significance of technology to the airline business. Notably, the firm created Lufthansa Innovation Hub (LIH) to oversee the execution of the strategy. Fast forward, an official statement indicates that the firm opened its first foreign office in Singapore.
The event took place on Monday, 28thof January and represents an acknowledgment of the dynamic technology sector of Asia. According to Lufthansa, the facility will spearhead the firm’s strategy for the region. Notably, LIH will conduct an in-depth exploration of the region in the specific context of how the firm can digitize operations. The particular focus here is mobility and travel within the Asian market.
LIH’s key objective is to establish strategic partners
Besides, LIH will develop a network of strategic partners in the tech space as well as in tech-focused research. This includes the specific mission of generating structured insights along the value that connects the Lufthansa Group to the market. Further, Lufthansa anticipates the facility to develop solutions that will cater to the local market.
Notably, the firm reported that there is an already developing relationship with INSEAD. Here, the two entities are collaborating regarding research and strategy implementation. Interestingly, work is already underway concerning exploration of the market. LIH’s Trend & Market Intelligence specialists are working together with researchers from INSEAD to explore “The Future of Work.” In this context, the two entities will examine the significance of the evolving technology space and how it can transform the business travel space.
As per Lufthansa’s statement, the desired endpoint of the research program will be a whitepaper detailing the proof-of-concept of the future of work. Later, the program anticipates testing the concept within the real-world environment. Toward the success of the program, LIH and INSEAD onboarded WeWork to provide insights into co-working. Other companies include Changi Airport as well as Munich Airport each of which will provide essential insights into logistics.
Another office to go up in Shanghai later this year
According to Gleb Tritus, Managing Director of LIH, the choice of Singapore for the base in Asia is due to its strong innovations record. “Singapore is clearly a pioneer of mobility innovation and our first collaboration with INSEAD, and other players strongly attests to how eager established local players are to experiment and explore,” he said.
Interestingly, Tritus hopes that the Singapore entry will give them a better view of the Asian technology ecosystem. As such, the Lufthansa Group will be better positioned to exploit the latent travel and mobility potential of the region. Further, the strategy will establish the company as a global leader in digital strategy as well as a dominant technology player in the aviation industry. Notably, the firm is the first Western airline to establish such an office in the whole region.
While LIH will focus on experimenting and exploring, it should also help Lufthansa open an office in China. Interestingly, Tritus explained that an office would go live in Shanghai before 2019 elapses. Notably, the firm will have a better opportunity to create a wider network of partners and associates.
Asia’s tech scene is expanding rapidly
As per Christian Langer, a VP at Lufthansa Group and managing director of Lufthansa Innovation Hub, the firm will prioritize partnership with tech startups. This is because they give momentum to the ongoing tech revolution in the region. Notably, Lufthansa will use this opportunity to embed its operations in Asia as it has done with the domestic markets.
Langer said, “More than ever, Asian startups, but also digital enterprises, are the driving force behind fundamental changes along the travel chain. With the expansion of the Lufthansa Innovation Hub, we want to become a part of this emerging ecosystem, just as in our home markets.”
Interestingly, the Asia tech scene is rapidly developing. According to knowledgeable observers, the Asia-Pacific region, as well as China, is taking over the mantle from the U.S. of home to disruptive innovations. Notably, the region is reported one of the highest venture capital activities in the recent past. The observers go on to note that Asia currently hosts more billion-dollar unicorns than America. As such, it is easy to determine why LIH chose Singapore for a starting point.
Lufthansa is leading the M&A front in the sector
When Lufthansa first announced the decision to expand to Asia, Carsten Spohr, Chairman of Deutsche Lufthansa AG said they wanted “to learn from the developments in Asia.” Therefore, entering the space this early will enable them to stay ahead of competition concerning digitization.
Lufthansa Group is not only looking to stamp global authority in innovations and digitization of operations. On the other hand, the firm is pushing for a larger market share as depicted by the recent move to take a majority stake in Italy’s Alitalia. The Italian carrier has been limping since 2017 when it went under administration. However, Lufthansa intends that Alitalia operates independently even if the acquisition succeeds.
If the deal completes according to Lufthansa’s plans, the firm will go down as a significant player in the industry’s M&A activity. Notably, the firm acquired various businesses about two years ago including Brussels Airlines. In particular, the firm is pushing for the majority stake in Alitalia for unrivaled access to the Italian market.
“We are interested in Alitalia but only if the conditions are right – they have not fundamentally changed… We are fighting for the Italian market, and that includes Alitalia,” a Lufthansa official said.
Lufthansa is Europe’s biggest airline for 2018
Even as the acquisition spree goes on, statistics indicate that Lufthansa was Europe’s biggest airline in 2018. During that period, the airline hauled approximately 142 million passengers, which is a record number. Notably, this arose from over 1.2 million flights that Lufthansa Group operated. As per the firm, they beat estimates concerning load factor where they achieved above 80% of it.
In a statement, Lufthansa asserted that much of the record numbers emanate from three hubs namely Vienna, Munich, and Zurich. All of these hubs experienced passenger growth of over 8%. Further, Munich is the original home for the Lufthansa Innovation Hub. As such, it is possible that the expansion into Asia will turn up the passenger haul in the region for the airline.