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Lufthansa breathes new life into product
Lufthansa breathes new life into product Kelly Clarke in Frankfurt (kelly@khaleejtimes.com) / 30 September 2013 World’s leading aviation group undergoes restructure to keep on par with growing air travel market in the Middle East Low-cost airport fees in the Middle East — especially in Dubai — make Gulf carriers one of the most-aggressively priced products within the aviation industry today, and German-owned Lufthansa — the world’s largest aviation group — is playing catch-up with one of the world’s fastest growing air travel markets. But at what cost? In order to gain level pegging with its competitors, Lufthansa’s 117,000-strong workforce is set to receive a blow within the next few years, with up to 3,500 employees being let go in a bid to increase profitability and decrease costs. But despite the risky long shot, Lufthansa’s corporate strategy is one that is bound to see it pick up momentum within the next decade, strengthening an already-strong position within the industry. During a Lufthansa Aviation Academy meeting in Frankfurt, Germany recently, Lufthansa’s director of group communications Aage Dunhaupt said that in order to increase cash flow to further invest in the product, “there will be a reduction in the workforce”. But will these employees be let go as natural wastage or lay-offs? Dunhaupt said the idea is to have a “natural fluctuation” either through employees being offered benefit packages or early retirement, and he added that “lay-offs would be the last resort”. “This is an investment to enable us be more efficient in the long run,” he added. In an industry that has transformed over the last decade, and with regions such as the Middle East slowly creeping through offering passengers flight travel at slashed rates due to lower landing fees at airports, European network carriers are facing a structural crisis. New competitors, yield decline and an increase in the cost of fuel — which has quadrupled over the past 10 years and sees Lufthansa spend $9 billion on annually — have all contributed to this growing crisis and large network carriers are being forced to adapt their business in order to keep their heads above water. The addition of 10 brand-new air carriers since 1999 signifies an industry dominated by new entrants, but with Lufthansa noted as the world’s leading aviation group, with a history spanning nearly 100 years and expertise including Lufthansa Technik — an aircraft maintenance repair overhaul facility, and LSG SkyChefs — the world’s largest provider of in-flight catering, they are in a leading position to overcome the current challenges being faced. According to IHS Global Insight, the Middle East’s annual GDP between 2013-32 is expected to grow by 3.8 per cent and while commodities, exports and infrastructure development are among the leading growth drivers behind the Middle East’s emerging economy, air travel is expected to dominate this success in the future. Lufthansa Group chairman and chief executive officer Christoph Franz, who recently announced his departure from the company early next year, told Khaleej Times that Germany — and Lufthansa especially — has always backed the idea of visa-free entry for Emiratis into the Schengen region. “We have always advocated for all entry bans into Europe be wiped… for tourism purposes and business purposes, we would favour this free flow of passengers,” he said. And as a result, this could create possibilities for Gulf and German carriers to work together in the future, allowing Lufthansa to cement a stronger presence within the Middle East. But Nils Ecke, Lufthansa Group’s senior vice-president of Airline Group, Alliances and Cooperations, has indicated that it has no immediate plans to work directly with Middle Eastern airlines. “Both [Lufthansa and Emirates] respect each other, but we haven’t found a good solution to work together. Lufthansa has a great feeding venture into Europe, but Emirates very much focuses on a hub service,” he said. According to Boeing statistics, air travel growth in the Middle East and Asia-Pacific will increase 7.3 per cent in the next 20 years, with the total scheduled passenger traffic — or revenue per kilometre — expected to hit more than 800 billion within this period. Speaking at the Academy, Lufthansa Group’s senior vice-president and chief strategy officer Sadiq Gillani said restructuring, consolidation and capacity discipline are all key factors that European carriers need to implement in order to improve profit margins and maintain global success — in line with the Middle East’s growing domination within the air travel market. With airlines achieving the lowest average return on capital when it comes to the value chain of the air transport industry, Lufthansa airlines, with a revenue share of 58 per cent on the group’s overall product/service line, sees little profit, with a margin of just four per cent. “This is an industry known to be turbulent, with no margins. No jobs, no hope, no cash, but this is what we have to fight for,” Franz added. According to Gillani, “Lufthansa’s additional expertise such as Technik helps with profits. Technik is big in China and the Phillipines and we’re now looking at the Asian market for expansion.” Dunhaupt added that the group currently has about 200 programmes set in place to improve their business structure and catch up with its competitors, and it is actively looking to double this margin, to eight per cent, year on year, from now. “From here on in we are working towards achieving profits of €1.5 billion each year to achieve this growth in margin,” he said. And the plan to increase profitability is by “financing investment”. The future outlook is to develop its portfolio by investing in the product, improving relations with airports and delighting customers and in 2011, Lufthansa set aside €36 billion to be pumped into aircraft purchasing. This strategy will take them forward to 2020, but so far they have only spent 25 per cent of this sum, although “the rest of the money has been committed”, Gillani said. In total, 59 aircrafts have been purchased, 34 of which are Boeing 777-9X models and 25 are Airbus A350-900 planes. And customers are going to benefit from premium services too. Business class is going fully-flat on its Boeing 747-800 fleet, making it the first airline in the world to introduce such a feature. In 2011, Lufthansa Group invested another €3 billion into its business, with €1 billion dedicated to the new Business Class seating — the single biggest expense in this investment. Since the end of last year, eight aircrafts — including a passenger jet travelling from Munich to Dubai daily — have been retrofitted with the seats, with a total of 104 aircrafts to benefit from the new luxury product by 2015. And it is also introducing a brand-new premium economy seating option for passengers as well, which will commence from 2014. With the Middle East — Dubai in particular — noted as a region of rapid growth and expansion, there’s no doubt that where there is buying power there is room for a product, so despite growing competition, Lufthansa Group is committed to staying on top of the game by regularly evaluating its already-strong business model. Continue reading
Iranian occupation of islands invalid: UAE
Iranian occupation of islands invalid: UAE Staff Reporter ((With inputs from Wam)) / 30 September 2013 While welcoming the change in stance of Iranian President Hasan Rohani, the UAE reiterated that the dispute over its three islands — Abu Mousa, and Greater and Lesser Tunbs — occupied by Iran, should be resolved peacefully through direct, serious talks or by referral to the International Court of Justice. UAE Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan urged Iran to settle the dispute either through direct, serious negotiations or by referral to the International Court of Justice in accordance with the principles of the UN Charter and the provisions of international law. Shaikh Abdullah said before the meeting of the 68th Session of the UN General Assembly that all actions and measures taken by the Iranian occupation authorities are null and void, and are contrary to international law and to all norms and common human values. ‘‘On the basis of these principles, the UAE Government expresses, once again, its regret regarding the continued Iranian occupation of our three islands of Abu Mousa, and Greater and Lesser Tunbs, and demands the restoration of the UAE’s full sovereignty over these islands,’’ he said in his speech to the UN General Assembly. On Iran’s nuclear programme, he said Tehran should ‘‘constructively cooperate with the International Atomic Energy Agency (IAEA), in order to dispel all suspicions surrounding its activities in a transparent and clear manner and to avoid any negative consequences arising from the absence of such cooperation’’. ‘‘The UAE believes that peaceful use of nuclear energy has become an urgent requirement in order to meet the growing demand for energy. We are proud to have a successful pioneering experience in the peaceful use of nuclear energy, which is surrounded with all guarantees of security and safety,’’ the foreign minister said. He said the country had also opened the way for the production of renewable energy and development of clean energy techniques to tackle climate change. The following is from the speech of Shaikh Abdullah before the General Debate of the 68th Session of the United Nations General Assembly, New York: “First, I would like to join previous speakers in congratulating you on your election as President of the 68th Session of the General Assembly, and I am confident that your experience in international affairs will contribute to the success of this session. I would also like to commend your predecessor, Vuk Jeremic, for his wise leadership of the last session, and also thank Ban Ki-Moon, Secretary-General of the United Nations, and his staff, for the tireless efforts they have been making to promote global peace, security and development. The UAE continues to deeply believe in the goals and principles of the United Nations, as enshrined in its Charter, calling for the protection of international peace and security, promotion of peaceful coexistence among nations and peoples through peaceful resolution of international disputes, and respect for provisions of international law and non-interference in the internal affairs of states. These goals have also called for creating a favourable climate for international relations based on tolerance, non-violence, recognition of the other, and respect for human rights and people. My country has followed this approach in its regional and international relations. Nevertheless, we cannot conceal our deep concern at the recent events in the Arab Region which were associated with sectarian strife, escalated terrorist attacks and growing incitement to violence, which led the region into a state of extreme polarisation, whereby stability and development were severely impacted. In the Arab Gulf, we see how extremism and terrorism in Bahrain are seeking to sabotage security and stability, and destroy a history of tolerance free from any sort of sectarianism. The situation was more aggravated by the politicisation and exploitation of religion to exclude and marginalise the other spectrums of society after they all used to live in harmony and peaceful co-existence. All these have led to widespread fears about the fate of the national state and the implications of that, which include shaking the pillars of the State, wasting its resources, and undermining its economy. You must be aware that such difficult conditions put the young people of the region at risk of falling into the clutches of extremism and violence, especially in a climate of growing despair and unemployment. This clearly affirms the paramount importance of the UAE’s efforts aimed at promoting a culture of moderation and non-violence, and fighting extremism in all its forms. In this regard, I refer in particular to my country’s initiative to establish the Hedayah Centre for Countering Violent Extremism. The UAE proposed its establishment at a meeting held within the framework of the United Nations. In this context, I condemn with the strongest terms the cowardly terrorist attack committed against a commercial centre in Nairobi, Kenya, which resulted in the death of dozens of innocent victims. The UAE is deeply disappointed at the inability of the international community until now to put an immediate end to the worsening tragedy suffered by the Syrian people caused by military actions and indiscriminate and systematic bombings by Syrian forces which have killed so far more than 100,000 people and injured and displaced millions of people, being to date the most serious violation of international law and international humanitarian law. We are deeply concerned about the growing serious implications of this conflict on Syria and the entire region, and we strongly condemn and reject all crimes against humanity committed by the Syrian regime, especially the chemical attack against Ghota, Damascus, which killed thousands of civilians and children. We, therefore, call upon the international community to take all necessary measures to punish the Syrian regime for its massacres against its civilians. All of you must be aware of the frustration we feel and the majority of countries in the region feel regarding the disabling of the United Nations mechanisms from acting against the aggressive acts of the Syrian regime against its people. The failure to act by international organisations is directly responsible for the aggravating humanitarian tragedy we witness in Syria and for the threat against the Syrian State, community and people. The UAE, which has fulfilled its duties regarding the ongoing relief operations for the Syrian people and continues to provide aid, hospitals, tools and the necessary medical teams, calls for concerted international and regional efforts to secure the humanitarian needs of the displaced Syrians inside Syria and across the borders to alleviate their suffering. Continue reading
City to turn pink for cancer awareness
City to turn pink for cancer awareness Staff Reporter / 29 September 2013 It’s that time of the year when you begin to see people sporting pink ribbons. World over, as in the UAE, October is the month for breast cancer awareness. One of the leading cancer types — second only to lung cancer as the most common cause of cancer related deaths in women — regular self-examination, early detection, and diagnosis is critical to fighting the illness. Pink Caravan, a UAE breast cancer awareness initiative launched in 2011 by Friends of Cancer Patients, will commemorate their anniversary celebrations with a line-up of activities this October. Corporate houses are going all out to honour the month. Galleries Lafayette is hosting a pink Buffet in aid of Pink Caravan. The pink pony campaign by Ralph Lauren will raise funds through the sale of limited edition tee shirts priced between Dh325 to Dh750, with one quarter of the proceeds going to Pink Caravan. Secretary-General for the Friends of Cancer Patients charitable society and Head of the Pink Caravan’s Medical and Awareness committee, Dr Sawsan Al Madhi said: “It is fantastic that fashion firms and retailers have embraced the notion of a pink October by creating special items to raise funds for cancer education and treatment. Ralph Lauren’s Pink Pony Campaign, in particular, has significantly increased breast cancer awareness and contributed towards many successful research projects around the world.” The Friends of Cancer Patients (FoCP) charitable society has revealed that women with advanced breast cancer (ABC) feel left out of the breast cancer movement. The results of the largest every global study, ‘Count Us, Know Us, Join Us’, gives a voice to the 250,000 women living with advanced breast cancer around the world. Based on testimony from 1,273 women in 12 countries, the survey shows two-thirds of women with ABC feel that no one understands what they are going through. Advocates for the cause, the Burj Al Arab will — much like in past years — each day in October between 7.30pm and 8.30pm show its support for the breast cancer awareness campaign by lighting its sail pink and adorning it with the symbolic pink ribbon. All afternoon teas at the hotel will include pink pastries including Ispahan macaroons filled with rose cream, pink choux, pink apple mousse cake, pink New York cheesecake, strawberry and pistachio tarts and pink-glazed traditional French mille feuilles. An estimated 1,00,000 pink roses will be flown in to further raise awareness. The hotel’s team of 12 florists have developed pink floral displays. All guests chauffeured to the hotel will be presented with pink roses and all women who dine at any of the hotel’s restaurants will be presented a single pink rose. For the staff at the hotel, Burj Al Arab will work with Pink Caravan to provide free voluntary medical examinations for the 1,600 staff as well as guidance on self-examination. All colleagues will also wear the iconic pink ribbons throughout the month. – news@khaleejtimes.com Continue reading
