This interview is part of our exclusive ‘Airline Leaders Series,’ conducted in collaboration with Branchspace – digital reinvented, aiming to transform airlines into better digital retailers. Throughout the series, we’ll highlight the key concepts that are shaping modern airline digital retailing, ensuring you gain valuable insights from each discussion.
Leader: Mario Maier
Airline: Lufthansa Group
Role:
Location: Vienna, Zurich
Talks about: Distribution, Direct Distribution, Direct and Indirect Sales, APIs, NDC, One Order, B2B, OTAs, Technology, Cloud
Why do you need to read this interview:
Mario is an acknowledged expert in airline distribution, particularly in direct B2B channels. Lufthansa Group has been a pioneer in transitioning from traditional to modern, API-based distribution systems, making Mario’s insights and experiences truly invaluable. This interview offers a peek behind the curtain, revealing how Lufthansa is transforming its legacy systems to align with the modern NDC (New Distribution Capability) standards, providing an essential roadmap for anyone looking to understand the future of airline distribution.
Mario: We actually have various distribution solutions in our Lufthansa Group Portfolio. First of all our Lufthansa Group NDC API. That’s our biggest solution. Then we have a distribution solution for meta searches, we call it a shopping solution, and then last but not least, a smaller solution for the touristic part, mainly for our home markets, which is an end-to-end touristic distribution solution covering contracting, invoicing, booking, order management etc. The whole value chain.
Focusing a little bit more on the NDC part now. End of last year we started a big Program, called Next Level NDC, which is now getting into full swing. One of our main focus points there is enhancing the servicing capabilities of NDC, create more content flexibility for our partners and taking the next step for Intermodal and Interline offers. First in our API but also via respective IATA groups, where we see the need to enhance the code structure itself. Closing gaps that we have today, getting rid of workarounds, especially for corporate customers but not limited to. All our customers will benefit from this program which will take Lufthansa Group to the “Next Level of NDC”.
Over the next few weeks and months, we will also share more insights on this program at conferences or various airline forums. So stay tuned.
Mario: When it comes to real retailing, merchandising, we are still years behind if you compare the legacy airline world with the Amazons, the eBays of today. In the last few years we’ve closed the gap a lot, but we’re still not where we want to be, where we should be. Lots of our legacy systems being used are very much relying on 30, 40 etc. years old concepts, of which not all of them are fit for a real retailing world.
This is one of the reasons why sometimes it’s hard to really do those next steps into the real airline retailing world, to become a real retailer. We’re getting there, but still quite a way to go. Now, to get us there, Lufthansa Group has also started an ambitious program last year, where we will really reshape the whole Lufthansa Group airline ecosystem. We will move to a real offer and order management system, which is the basis of modern airline retailing. Many years ago, it was obvious not only to us but also the whole industry, that we needed change in how airline distribution works. That’s when we started our NDC journey. Only the first step, in which we are really successful and already have achieved a lot. But, we would not be so successful and relevant in the market with our NDC API, without the support of all our partners and customers out there. We are very thankful for that.
Second step is now to do modernize everything on the order front and with that start shaping the whole end-to-end system. Nothing that can’t be done within one or two years. Moving a big, big ship from left to right takes some time. It just takes a little bit longer to get there, but we’ll get there.
Mario: What we have seen in the last few years is that lots of IT providers that were hosting software in their own data centers are now moving everything into cloud environments. Scalability is the new mantra. Upscale but also downscale. That has really picked up.
But It’s also not a walk in the park. Just putting software from your own on prem data center into a cloud, is not so easy. You need to see if your software is also capable of being hosted in a cloud. But when you’re in a cloud environment, when the software is cloud native, the processes are adapted, then you profit from cloud scalability.
Second big trend, data intelligence, AI, etc. Last year was the year within Lufthansa Group of ChatGPT and Machine Learning initiatives. Everybody wanted to do something with AI & ML. On every internal conference those were the big People came around the corner with ideas saying, “Can we reshape, for example, our user manuals for API users with ChatGPT or ML? Yes, of course you can. But you need to be cautious.
At Lufthansa Group internally, we’re using versions of ChatGPT for various topics. We have versions which are secure and safe to be used. You often read in the press that people use ChatGPT for internal topics and were not cautious enough to check if those internal infos also stay internal, and suddenly you have a problem. AI, machine learning models etc. were and are really big trends for sure. For this year and the years to come. We`re just at the beginning of this journey.
Source: Lufthansa Group
Mario: Actually, two years ago we started some brainstorming with one of our main IT vendors in the filed of enabling software in client preferred clouds.
For example. We have a piece of software which is currently hosted on the IT vendor cloud. Now, if you want to distribute that piece of software, that B2B solution, to other customers in their preferred cloud solution, you need to find smart technological, commercial ways to do that with your IT vendor and your B2B partner. Today our B2B partners are sending requests to the solution based in that IT vendor cloud. And somebody has to pay for that. Currently we are doing that.
Then we said, okay, what about if we try to turn around that model and say whoever is hitting that system to a certain level also needs to bear parts of the cost for that? Of course, you can’t just only offload everything that to your B2B partner. You need to make this attractive. So, we have the software and architecture setup with our IT Vendor in a way, that it can also easily be “mirrored” in a cloud solution preferred by our B2B partner. A base level of transactions is then agreed and whatever is above this threshold is then being paid by the B2B partner within their commercial agreement with their cloud provider. We do not enforce the partner to use the software in our cloud anymore. This way you can share increasing transaction costs making use of commercial favorable agreements with cloud providers for the airline, the IT vendor and the B2B partner.
That’s a little bit the idea behind it. We are just in the middle of starting a pilot project for that with our IT vendor and with one B2B partner. Increasing transaction costs for airlines. Shopping costs. Systems hitting our system. Bots hitting our shopping engine and so on and so forth. At some point, either you throttle or cutoff traffic, or find ways of streamlining the cost setup plus constantly work on optimizing the computation process, the output itself. It’s technically but also legally a complex setup but manageable.
Mario: I think the next four to five years are the most critical ones but are also very exciting, and we’re already driving on that road and picking up speed constantly. We are investing to reshape and make our airline ecosystem future fit for the next 10 or 20+ years to come and we have a concrete plan of the “how – when – who – what”. The first results of that very big transition will be visible and making a difference for our B2B partners, for our customers much sooner than 5 years.
If you want to learn from leaders like Mario about how to advance your airline digital retailing or want to be the first to know when our next Airline Digital Talk will be published, please:
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