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Lufthansa CEO thinks long haul markets will reopen with rapid testing before Christmas

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On Friday, Lufthansa CEO Carsten Spohr gave the final keynote interview at the World Aviation Festival, discussing his views on the outlook for aviation in the coming months and years.

I listened in to see what he had to say.

Lufthansa A380

What’s happening with Lufthansa’s fleet?

Changes to the Lufthansa fleet have been ongoing since the realisation in April that Covid-19 was here to stay. Almost six months ago, Lufthansa slashed its fleet, ditching a number of its older A340 and 747 aircraft.

Since then, Lufthansa has announced it is mothballing its remaining A340s and A380s. This leaves their future open although its difficult to remain optimistic given early retirements of these aircraft by other airlines.

Lufthansa hopes to cut its fleet by around 150 aircraft across its airlines, which include SWISS, Austrian and Brussels Airlines, from its 2019 peak of 800.

As a rule of thumb, each aircraft retirement affects around 100 jobs at the airline.

Two thirds of the fleet is currently grounded and Lufthansa expects around half to remain grounded going into 2021.

Lufthansa has chosen to retain its 747-8i – the latest generation 747 aircraft – as it positions it as its current flagship. The lower passenger capacity but increased cargo capability means it is far more versatile at the moment.

The future of the loyalty program

There was some discussion over the future ownership of Lufthansa’s Miles & More loyalty programme, given the continued need for funding. (Despite receiving a €9 billion bailout from the German Government, Lufthansa is still seen as vulnerable given its current cash burn rate.)

Spohr is clear that Miles & More isn’t going anywhere. It is “just not for sale” and a “key enabler of customer relationships”.

He pointed out that Air Canada has just brought its loyalty programme, Aeroplan, back in house.

(It is also fair to say that Aeroplan killed off any opportunity for other airlines to monetise their loyalty programmes. As soon as the initial contract between the airline and Aeroplan ran out, Air Canada announced that it was launching its own programme. The value of Aeroplan collapsed to, give or take, nothing and Air Canada was able to buy it back for peanuts.)

Heathrow Covid-19 testing

Covid testing

Lufthansa is pushing airport and airline testing of passengers very, very hard. Spohr is a “strong believer in testing being a game changer for this industry.”

In the past months Lufthansa has been offering PCR swab tests at both Frankfurt and Munich, allowing arriving passengers to get tested.

It wants to take this one step further and announced this week that it is rolling out free rapid antigen testing to its premium passengers.

Existing PCR testing is slow and expensive, with results taking hours. The new antigen tests are much faster – just fifteen minutes – and significantly cheaper at 5 to 7 Euros.

The only drawback is the accuracy, which is marginally lower than a full PCR test.

Nonetheless, Spohr considers widespread testing “just weeks away” at Lufthansa and the only way to “reopen global skies” in the immediate future. From the sounds of it, Lufthansa is pushing to offer solutions to the current situation rather than waiting for a potential vaccine to arrive.

“Without testing there will be no re-opening of the transatlantic in the short term future.” Much like British Airways, Lufthansa has been talking to US and German authorities to try and open up transatlantic flying by introducing these rapid tests. He expects antigen tests to be accepted by governments in October.

Lufthansa sees sufficient availability for these tests in the fourth quarter and hopes to re-open select long haul routes before Christmas, although “before we have a full fledged global network again including testing I think we’re looking way into the second quarter next year.”

Will business travel bounce back?

Spohr gave a remarkably bullish outlook on business travel, arguing that in the long term only around 10% to 15% of business travel will be replaced by digital tools such as Zoom or Teams.

However, he sees the long term trend away from business travel and into leisure and visiting friends and relatives continuing.

Will airlines go bust?

Spohr sees consolidation in the aviation industry as a “mega trend.”

“I see way too many players in Europe and I’m sure some of these will not survive.”

“I have been fairly critical to the blind growth of our industry for the last years.”

He predicts that the future will see more focussed and sustainable growth by airlines.

What does the future hold for Lufthansa?

Investment has not stopped at Lufthansa, although it is being pushed down from the record levels seen in 2017, 2018 and 2019.

Lufthansa will continue to renew its fleet with more efficient aircraft, and the new business class seat pictured above, due to debut on the 777X, is still going ahead.

Only time will tell if Spohr is being too bullish about the future.

Comments (80)

  • Dubious says:

    ‘consolidation in the aviation industry’
    I do wonder which airlines will be the ones with the pockets deep enough to go shopping.

    • insider says:

      i doubt there will be many, if any going shopping. It’s just way too risky at the moment. More likely you will see airlines go bust and others will pick up their slots as and when they can

    • Doug M says:

      Do you need deep pockets to shop at the moment. The bigger problem is who wants an airline right now.

      • AJA says:

        “If you want to be a millionaire, start with a billion dollars and launch a new airline.”

        Richard Branson

  • Jimbob says:

    I’ve become quite pessimistic about long haul travel over the next 12 months.
    Little point in a rapid antigen test if your in lockdown. Wouldn’t be so bad if you had faith in the industry that you could cancel at short notice and get your money back in a reasonable time

  • John says:

    The problem is if you test positive then you’ll have to be isolated for 14 days. Not so bad if you test before departure and can go home, but I wouldn’t be able to risk 14 day isolation on arrival or on the return trip

    Also I would want airlines to offer free rescheduling if I tested positive

    • memesweeper says:

      … another thought: if you have a long-haul trip-of-a-lifetime booked for your family, and an airport test to pass before you leave, how are you going to behave for the 14 days before travel? Personal choice lockdown?

      • John says:

        I don’t think people who book “trips of a lifetime” are able to stay at home for 2 weeks, either before or after the trip

  • Andrew says:

    And 12 hours in a facemask, eating a readymeal from a cardboard box, with long lines for testing and Ellis Island style health checks on arrival. Relaxing! This guy is living in a dream world if he thinks demand will bounce back quickly. And it’s interesting that airlines paint a doom and gloom worst case scenario picture so they can get a government bailout, then once they have it, they paint a positive picture to encourage bookings. All just a marketing game.

    • Tom says:

      I don’t think he’s necessarily living in a dream world, just that he is very much incentivised to do everything he can publicly to make the case for testing and reopening, it is literally his job to do it!

    • Alice says:

      If you require people to test negative then you don’t need masks and other restrictions on the plane right?

      • Andrew says:

        I think we’re a LONG way off being that confident about test results. Masks and limited catering service are here for a while longer yet.

    • jamie says:

      “Ellis Island style health checks on arrival” you sound like a Tory spin doctor – where are you getting the evidence for that piece of scaremongering?

    • Ben says:

      “Ellis Island style health checks on arrival” – have you tried the testing facilities and Munich or Frankfurt? I have, and it’s quick, efficient and friendly. I was in and out within minutes, and if that’s the slight inconvenience we have to pay for travel to reopen I’m all for it.

      • Littlefish says:

        Similarly, the Jersey arrivals test experience was just fine. Much much less bother than traditional Airport pre-Departure security.
        Rapid pre-departure C-19 tests present a massive opportunity; sure, won’t return custom to 2019 levels but is a massive step to allow safer travel and opening of borders.

    • TGLoyalty says:

      Lufthansa and others provide full service it’s just BA with a shitty box

  • ChrisW says:

    The only thing that is going to save the airline industry, and the cruise ship industry, and the live music industry, and the theatre industry, and the nightclub industry is…

    A proven, globally available, affordable and accepted covid-19 vaccination. You would carry your certificate around with you when you travel like you would with a yellow fever vaccination when visiting certain parts of Africa.

    I’ve read many health experts say the vaccine isn’t likely until at least summer next year. Until then we all continue to live in this limbo hell of avoiding people, avoiding being in public, being miserable and waiting to wake up from this nightmare.

    • insider says:

      if the summer next year is even half as bad as summer this year, there won’t be any airlines left. Well – they will all be owned by their respective governments.

      Even a moderately good summer next year will be tough – there are so many outstanding vouchers left that limited amounts of new cash will be going to the airlines.

      • Doug M says:

        I think this is a considerable problem. The voucher system was a kick the can down the road situation. There’s going need to be a substantial upturn in bookings with new money to ease airline problems. But of course the real problem is the unprofitable way in which most airlines are run. But whilst governments cling to propping them up that will never change.

      • Alex Sm says:

        You echo what’s being said about EasyJet

        EasyJet ‘hanging by a thread’, says union official https://www.bbc.co.uk/news/business-54303379

        • Rob says:

          This is the story I ran on Tuesday. BBC is 5 days late. However, we had to moderate our version after easyJet’s lawyers threatened us. The BBC, and The Guardian who also ran the story today, have lawyers of their own.

    • TGLoyalty says:

      Only the clinically vulnerable and elderly would be given the vaccine periodically as with flu today. Then private doses made available to others as production capacity increased.

      99% of the rest of the population get no or mild symptoms. I don’t see why anyone would need a certificate like yellow fever, which is specific to certain parts of the world and not globally administered.

      • ChrisW says:

        Because countries will require a vaccination certificate to allow foreign tourists entry, just like some do with yellow fever. Far easier than all this test within 72 hours, or mandatory quarantine nonsense.

        • TGLoyalty says:

          Just like those anti body certificates that were going to issued?

        • TGLoyalty says:

          The reason you need a yellow fever card is to prevent the spread of yellow fever to countries which don’t currently have it. Humans can pass it on to local mosquitos and it’s spread in the local population. Plus it kills c15% of people that catch it far higher than COVID19 which people estimate at around 0.5-0.3%

          If the nearly the whole globe has covid-19 already in the population and is vaccinating their vulnerable population then there’s no reason for a certificate. Only a handful of countries have elected for eradication so they might have some specific requirement but I hope all doses are used for the vulnerable across the globe first and not so people who would have mild or no symptoms feel safer travelling.

        • Rob says:

          The Astra vaccine is targetting a 50% effectiveness rate – that is the level at which it will be authorised (ie it works in 50% of the people who take it). I can’t see any countries letting you in with a certificate where you still have a 50% chance of being able to transmit.

          This is ok in general (if 10% of people have immunity and you vaccinate the rest, 55% will be immune which will massively reduce transmission) but no good on a case by case basis.

          Of course, if its 50% effective and only half the country get it, then only (10% herd + 25% of 90%) 32.5% of people are immune and that won’t hugely slow spread.

    • PJ says:

      Sadly I fear your confidence about vaccination acceptance as a way out of this limbo hell may be misplaced.

      I would see two ways of allowing a return to normality.

      The first is a proven vaccine as you mentioned but this in itself raises a number of issues.
      1) absent an immediately obvious visible method of identifying the vaccinated the distancing and face covering stipulations will remain in place in respect of queuing and accessing areas. This still presents problems for business/conferences and tourism travel (and that’s without discussing the emotional connotations and cultural significance of an immediately obvious method of identifying the vaccinated).
      2) seeing (now a number) of vaccine experts in various media the early prediction I saw is coming to pass. Namely that any one vaccine (or possibly combination of vaccines) will not provide measles/yellow fever etc type immunity. At best it will be flu jab esque and serve only to reduce a persons prospects of catching covid and, should they still catch it, reduce its impact on the victim in terms of how ill they become. This therefore wouldn’t necessarily end this limbo hell of distancing and masking and the issues to travel – both business and personal – remain.

      The second option is the commencement of an adult debate on an acceptable number of cases and fatalities are in order to exit the economic and emotional limbo hell we are in with the disease now endemic. The shift in emphasis from not overwhelming the NHS to disease elimination is not helping any sector of the economy and as we enter a period of greater restrictions (on local levels here in the uk) on lifestyle and, in the case of wales a stipulation against all but essential travel, it is tough to see any way for the mass close contact sectors (conferences/tourism/cultural) to re-open anytime before 2022.

      Allied to this is public feeling. Whilst I’m cheesed off being home I could live with distancing being out and about etc but the new masking requirements, to me (and I imagine a number of others) represent such a degradation of experience, that I’m not minded to head out for anything other than essentials and certainly not to spend time peering through fogged up glasses in a smile-less world. Curmudgeonly as that might sound it’s a view also expressed by a number of my neighbours who are the frequently travelling frequently dining out sorts of people that the travel and hospitality industries depend on.

      • Doug M says:

        Is there ever an adult debate about health/NHS and Gov involvement in them.

      • Littlefish says:

        Very good post PJ.
        On the 2nd point, ‘acceptable levels’. This is a debate that has barely started. I’d expect a point to come where (like flu) confidence in human kind’s ability to treat and ‘live with’ will increase and the stigma / uncertainty we have now will lessen.

        On the vaccine. I see this very much as the ‘safety net’. The rafts of vaccines should help reduce percentages of serious cases by giving more strength to more people (esp. elderly and vulnerable) to fight off the C-19. Great. Fewer deaths and less strain on Health systems.
        I have not heard or read yet that vaccines will stop people transmitting or catching C-19; which is a key point. Some may, but that is not a sure thing.

        So, over time, reasonable minimisation of transmission rates will remain part of the overall way to live with this (and is unlike how flu is addressed hitherto).

        What the LH CEO is talking about seems to fit within all of that; so the sooner the better.

      • Depressed+Restless says:

        I’m footloose and fancy free (single, retired, love to travel) but agree 100%: “I’m not minded to head out for anything other than essentials and certainly not to spend time peering through fogged up glasses in a smile-less world.”

  • marcw says:

    Tests are there for diagnosis! They are not a good screening method. If we don’t understand this, we will never understand how to fight a virus.

    The only way to fight this virus, efficiently, is with a cure. A vaccine won’t help that much. Look at aids… There are very effective methods to stop transmission … Have we won the virus? No.
    Developments in treatment is way more effective to return to “normality”.
    We are still very far away from an effective and efficient vaccine.

    • TGLoyalty says:

      I think a rapid tests that costs £10 and is effective 90% of the time would give far more confidence. People seem to be getting hung up on clinical requirements for super accurate testing for day to day life not diagnosing people with serious complications for treatment.

      If the goal is to keep the virus down and away from the vulnerable then rapid testing would help do that. Just like temperature checks might not catch everyone but they’ll help.

      If I was going to an airport or theme park or large shopping centre etc and I was temperature checked then given a £10 rapid test and passed happy days. But I’d expect not to have to wear a mask etc.

      If I failed either and was asked to take a proper PCR test I’d rather know I had it and needed to isolate than live in ignorance and pass it on to anyone.

      • Bagoly says:

        If a test is 90% accurate (i.e. only 10% false negatives) then for a group of 20 people who are actually positive there is a 88% chance that the test missed them.
        That’s not a huge problem if you come into contact with few people and the population prevalence is very low, but when the prevalence increases it becomes a big issue.

    • ChrisC says:

      The reason why there are silll new cases of HIV/AIDS is because some people still don’t use the effective methods that stop transmission and those are essentially use condoms and don’t reuse needles. And wnhilst there are effective treatments now they can still have unpleasant side effects and still require people to take their tablets on schedule.

      Just as with covid there is an effective method to limit transmission and that is to wear a face mask and proper hand hygiene.

      And tests are used for screening such as the smear test for cervical cancer, the one for bowel cancer as well as the infant heel blood test plus others.

      • TGLoyalty says:

        Wearing a mask isn’t an affective way of stopping transmission it just lowers the risk.

        • TGLoyalty says:

          Just so it’s clear I mean lowers the risk but no where near to the levels of using a condom or not sharing needles does for HIV/AIDS and other sexual or blood transmitted diseases.

          • J says:

            There are actually drugs (Prep) which offer even better protection than condoms for groups at higher risk of catching HIV – because of the now widespread availability of prep new cases of HIV are at an all time low.

  • Jonathan says:

    He hasn’t said anything about whether or not any Lufthansa’s destinations will be letting tourists in again when these flights supposedly restart

  • AJA says:

    I’m sorry but I think this is a case of trying to convince us to travel. It suggests a whiff of desperation. The proof will be if we do indeed start flying again. And there I think is the problem since the constant changes of adding to and removing countries from safe lists is not encouraging people to book especially with no certainty that flexible booking policies will be extended. I think instead of arguing for cheaper and quicker testing the airlines should include insurance cover and give automatic refunds if you can’t travel due to covid disruption.

    • Jack says:

      I agree. An email similar to BAH “your flights are canceled – here is your refund” would go a long way to helping. BA apologists who defend the company on how difficult it is to get a refund are laughable.