British Airways, Lufthansa push improvements in service

Business travel

March 02, 1992|By Tom Belden | Tom Belden,Knight-Ridder News Service

With the consolidation of the U.S. airline industry almost complete, the North Atlantic is now the industry's hottest competitive battleground, and new marketing schemes to tap into the business seem to pop up weekly.

The latest are from the two biggest European airlines.

British Airways, trying to hang on to customers it has worked hard to attract in recent years, last week set up its own frequent-flier program and cut or changed its ties to the programs of its biggest two competitors, American and United.

Lufthansa German Airlines unveiled a host of service improvements, including better seating for first- and business-class customers and tastier food for everyone, and warned that it was getting more competitive in other ways.

More than other European airlines, British Airways and Lufthansa face intense new competition between North America and their major European hubs, because of the changes in international service last year.

At London's Heathrow Airport, British Airway's major competitors are now American and United, which took over the most lucrative U.S. routes from now-defunct Pan Am and the shrinking, weakened TWA. At Frankfurt, Germany, Delta now has a major presence and significant service not only to and from U.S. cities but also to European and Mideast points.

The changing nature of the competition prompted British Airways to end its partnership with United's Mileage Plus frequent-flier program and restructure its relationship with American's AAdvantage program.

Previously, an AAdvantage or a United Mileage Plus member could accumulate miles by flying on British Airways, American or United, and then redeem the miles for free trans-Atlantic travel on any of the three airlines.

Now, passengers can use mileage built up on British Airways flights on any of American's routes within the United States, the Caribbean and Latin America. After March 31, those miles will not be usable on American's trans-Atlantic routes, where the two airlines compete head-to-head. After May 31, there will be no exchange of frequent-flier benefits between United and British Airways.

British Airways will still be a partner with USAir and Alaska Airlines.

Some analysts wondered whether the British carrier, whose reputation for good service has given it a loyal following among international business travelers, may have shot itself in the foot. Some frequent North Atlantic travelers who like British Airways -- but have lots of miles in the American and United programs -- could switch to the U.S. airlines now that their British Airways mileage isn't any good on those carriers.

Although British Airways' program has some good aspects, "I don't think it will be all that successful," said Randy Petersen, publisher of Frequent, an authoritative monthly newsletter for frequent travelers. Among the things that the new program lacks, he said, are tie-ins to other services, including credit cards and long-distance phone companies, that can help increase mileage.

But British Airways is making its program -- called Executive Club -- different from those of the U.S. airlines in several key ways that could help it develop a loyal following.

The best British twist, Petersen said, is to offer "household" accounts that will allow up to four people who live at the same address to accumu

late and share mileage credits.

Executive Club also will have no blackout dates, which the others do during busy travel periods, such as the Christmas holidays. And new members of the program will get 10,000 bonus miles after the first paid British Airways round-trip trans-Atlantic flight completed by the end of 1992.

At Lufthansa, which already has a frequent-flier program for U.S. travelers, officials are working on several enhancements to the program, including bringing European-based passengers into it and creating a strong affiliation with just one other U.S. airline's program. Now, passengers on the German airline can earn mileage in a number of U.S. programs.

In the meantime, passengers should immediately begin noticing the improved in-flight service Lufthansa has been testing for the past 18 months, airline executives said in New York last week.

In both first and business class, there will be fewer seats in each section, but each one will be wider and will recline more so passengers can stretch out and rest better. Headsets for listening to audio and video programs are getting better, as are the programs themselves. The meal service in all three classes of service will be more elaborate and tastier, the officials said.

The service changes, along with a recent reorganization of Lufthansa's executive structure that improved the way it manages its worldwide route network, are making the airline more competitive with U.S. carriers, said Ernst-Adrian von Doernberg, chief executive of marketing and sales.

"We're leaner and meaner, more efficient and even more service-oriented than we were before," he said.

But there is much more that needs to be done to help Lufthansa compete, Mr. von Doernberg said.

The changed trans-Atlantic competition has led Germany to seek a reopening of the bilateral treaty that governs air service with the United States. The agreement hasn't changed substantially since it was adopted in 1955. As it now stands, U.S. airlines have virtually complete freedom to fly to and from Germany, while Lufthansa has more limited service to the United States.

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