Just a few hours ago, Lufthansa raised its forecast for full-year 2008 operating profits from EUR1.1 billion to EUR1.3 billion thanks to a stronger-than-expected fourth quarter. And this comes in at a time when not most major airlines around the world are struggling, but when Lufthansa’s main rivals in Europe, Air France-KLM and British Airways have both issued profit warnings in the past two weeks.

How does Lufthansa defy the trend?
A Lufthansa spokesperson says that lower fuel prices and favorable valuation effects were offsetting a slowdown in traffic demand. But I think there’s more at play here. It’s the formidable Lufthansa brand, that has stood the test of tough times, yet again. A brand that exudes reliability and efficiency

And a strong Lufthansa brand coupled with a vast network in developing markets like India only further helps the cause.

Continuing my series of articles on what makes or breaks airlines operating in India this February, I’d like to share the story of Lufthansa – probably the strongest foreign carrier in India. Below is an article that was recently published in the Indian Express (North America) edition, which comprehensively covers the key …

AirFrance-KLM recently launced Bluenity, what they claim as the “first social network for travelers†by an airline. But as Scott Carmichael pointed out in his article at Gadling, Lufthansa was the first airline to launch such a social network called GenFly Lounge – targeted at student travelers. Both of these sites follow the norms of social networks, allowing you to add friends, have a profile page, and of course, update your travel plans and interact with other travelers.

But it’s important for airlines to differentiate their efforts so that they’re not creating yet another Dopplr (which I think is a great community for travelers). So, what are some of the things that airlines can do to ensure that their online forays help enhance the brand overall?
How to “control†the brand online?
Don’t even try! Since it’s the world of user generated content, user opinions often matter more than what the “corporate speak†is. As Michael D’Esopo from Lippincott shared in his interview, there is a need to allow free discourse to take place online. The airline should really just act as a moderator. This way, …

Recently, there has been a surge in online betting on an interesting issue – which would be the next airline to go bust? Below is a screenshot of one of those sites. From the odds, we can tell that FlyGlobespan and SkyEurope are the most likely to go bust very soon, and British Airways and Lufthansa are the commercial airlines least likely to go bust.

So, does that mean that airlines with stronger brands less likely to go bankrupt? It’s a lot about consumer perception and brand equity. Let’s discuss, and hopefully, we’ll reach a conclusion that derives a relationship between betting odds and brand equity!

Image by John Creasey via Flickr
One of my aviation junkie buddies from Singapore recently posed an intriguing question:
For airlines, does the product come first or the brand? Essentially, if an airline is losing money (as is the case with many airlines these days), does the management concentrate on revitalizing the product so that it can turn a profit in the short term, or is it better to focus on brand building, for long term sustainability?
On the surface, the answer may appear simple enough – what’s the point in thinking about long term profits, if you’re not sure of surviving another month with the current product offerings and operations?

More importantly, concentrating on just the brand without a strong product is like putting lipstick on a pig. It just doesn’t work, regardless of the quality of the lipstick. Especially so in the highly volatile, and very competitive airline industry. This concept is visible in the latest United Airlines advertisements shown during the Olympics, which show animated figures supposedly (since there it is difficult to infer) enjoying the luxury of United’s new international first class. It’s so far removed from the reality that the nickle and dimed customers probably don’t feel any connection with it. Here’s a sample of that advertisement.

With all-business falling from the sky like flies, the discussion today explores whether all-business class travel on full-service airlines has any future.