IT Organizations in the Digital Era

Taking retail sky high:
Lufthansa’s digital
technology journey
DR. ROLAND SCHÜTZ,
EXECUTIVE VICE PRESIDENT
AND CIO, LUFTHANSA GROUP
AIRLINES AND DIGITAL
INITIATIVES
The airline industry today echoes the retail industry’s state of play
at the dawn of the “Age of Amazon” six years ago. Taking a page from
the retail playbook, we know that we must see today’s connected
customer as an individual — be it an economy or premium passenger.
Technology has disrupted the airlines business. The competition to
capture passenger attention and loyalty is a challenge, especially with
direct threats from new online competitors whose services compete
with airlines’ services. Similarly, technology has also affected
organizational structures within the airline businesses, creating
company-wide implications.
By harnessing technology to successfully improve our processes – from
customer experience to crew scheduling to baggage handling – we can
deliver outstanding value and service to our passengers and change
the way the IT function links to the enterprise strategy process.
LEVERAGING TECHNOLOGY TO ACCESS CUSTOMERS
Many online booking sites rank flights by price, often neglecting the
number of stops, knee-space available, and other amenities. If airlines
like Lufthansa are only ranked by price, then we will never be at the
top. However, we believe technology can enable us to carve competitive
advantage and get closer to our customers. The airline industry can
profit from its position as a follower of the online retail industry by
adapting readily available technologies to our industry in the form of
solutions, especially ones that help us understand the needs of the
individuals we carry.
The greatest need for us today is to understand the behaviors of every
one of our passengers. Losing connection with our customers means
treating them as a commodity rather than building loyalty. Our challenge
is to demonstrate and convey the value we bring to our customers, such
as the significant investments we have made to improve our cabins for
their comfort. By using big data and predictive analytics to understand
and assess our customers’ needs, we can capture their attention and
loyalty.
We can holistically adopt technology so that the so-called “max state”
happens in parallel. Our industry is adopting technologies to enable
mobility, understand customers better, and improve the in-flight
experience. For example, the airline industry is a low margin business,
driving it to seek new ways to expand its revenues through ancillary
sales. Technology has the potential to create new in-flight retail revenue
opportunities from passengers whose attention we can capture for the
duration of the flight. Like the Google car, which will enable Google to
access the hours in which people commute to get them connected, the
significance of captive airtime is enormous.
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