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Air Serbia and Swiss/Lufthansa airline executives: Leading an airline in 2021

Jens:

Let’s talk about processes again. We touched on it earlier, bookings that are coming in late, the scenarios are changing constantly. The historic data that you’ve relied on for your decision-making in the past doesn’t really help here because you don’t know whether it actually is valid. What does that mean for your processes? How have you changed? Tamur, do you want to go first?

Tamur:

Yeah, I think that’d be a lot of changes. And one change definitely has been an even closer relationship between network planning. I think operations being nimble and being flexible to ramp up or ramp down operations is really crucial in this time. And here, I think it’s not the first mover advantage, but the second mover advantage because people that have moved too quickly up, I think have realized that things take longer. And I think a more conservative approach there has proven much more efficient. So that’s one of the learnings.

It might be different now in the ramp up. We have to see, and we have to get near the sweet spot, at what capacity is needed. I think that internal collaboration has even strengthened. Also of course, the degree that cargo plays a role. And so, the cooperation between cargo business and network business is important. I think that is something really that is becoming really recipe for success, particularly in the long haul business.

Then you have complete change of revenue management systems. As you said, we cannot rely on the traditional historical data, so we have adjusted that. We have adjusted over two million fares and loans for Lufthansa group and its share for Swiss. So, we have done a lot of changes there. The way you steer the flights, I think has changed. Many, many aspects, and very important is also I think again, how you interact with the customer.

I think the learning was that when you come into the crisis, you’re also exposed to the deficiencies that you have and let’s take the big refund topic where all of us have suffered a lot in the crisis and for example, for Swiss, I can say now with a lot of AI, a lot of also human touch and a lot of process change we have managed now to come back to pre-COVID, answering times of our refunds and to pay them back in time, a hugely important topic for confidence for the customer, but also the question, how you channel information to the customer and get also a two way street of conversation. I think there’s more we can learn from other industries so we’re not at the end of the road. There are some hard learnings also, but so many aspects in terms of customer, of operations, of planning and of steering where we have changed and have learned in the crisis.

Jens:

You’re a big organization, don’t you also have to be much quicker than in the past?

Tamur:

Yes, of course. That’s something, we have the advantage that we have the top structure in Europe. So, it’s not just one big hub and we have to manage that, but we have, of course, we have Frankfurt, we have Munich, we have [inaudible 00:18:44], we have Zurich, so there, we can also do things on a smaller scale and we can, I think, act more flexibly and quicker and use the benefits also of such a hub structure and not relying just on one big hub. That is the advantage now often in terms of group. That’s something we have used in the learnings that we could exchange for each other.

Jens:

You’re talking about how the learnings are actually beneficial for the future and how some of the customer interaction may be improved, refunds being one of the most prominent examples that didn’t go so well in the past few months, do you have a similar view? Is that crisis a push for some of these digital initiatives that should have been made earlier?

Jiri:

Look, I think that there is a famous saying, like never waste because a good crisis forces new opportunities. I think that in our case as well, many decisions, which we have planning in our five-years plan and had ambitions to implement that in the future, we just simply use this crisis to implement them now because it’s like when else you can implement it? We already have enough resources to deal with those things because your capacity is reduced. And also, let’s say the market dynamics change dramatically, so for example, we significantly fast track our mobile channel and our direct channel. We recently introduced the GDS surcharge, which is something already known for a couple of years by colleagues from the Lovaza group, but not so much for the regional airlines.

We do a lot of these changes, which may be in a way strategical and dramatical for many of the airlines. But now is the best time to start to completely revamp and change the way you operate. So that was, in terms of what we fast track, what we actually learn during this crisis, that also our internal processes has to much more streamline, typically organization, even if you are a small regional carrier, you still operate very much in a silo system. Even if you are within one area, for example, commercial, even for example, network revenue management, e-commerce and the other things, they not necessarily communicate well together, but now you need to streamline this and make them all one big operational center to make quick decisions.

And one of the keys, actually what we learn is to in this crisis to really make the call center part of the also decision-making process, because now the customer is key, and the customer you need to satisfy his needs. And many times, it happens that they learn something about the travel restriction from the press and the official communication from the official also it is coming usually four, five, six hours later. You don’t have the information to the call center, what they can provide to the customer. So, this kind of information flow and gathering and making a call center the first one to be aware of any decision which is happening to your network, to the travel restriction, because they are your ambassadors now to the customer where you have actually very limited contact because of all the external circumstances.

Jens:

You both talked about the need to talk more between the departments, between your ops and commercial planning and so on. I wonder what, in terms of fleets, how do you operate differently and what types are you now focusing on? I understand that as Swiss, a lot of the European network is now A220s, rather A319s or A320s, simply because they’re smaller and more efficient, do you always get the cooperation from operations to do that quickly? And do you have to be more flexible in the future than you’ve been in the past?

Tamur:

Well, I have to say that I’m very happy about the cooperation that we have in Swiss between operations and planning and fleet management. I think it’s one of the big strengths, the way we can flexibly here bring in assets or take them out. I think that’s something that really proven very efficient and very useful. When you asked me, which type of aircraft we are looking at, we had the advantage that we had invested before the crisis way heavily into that new generation of aircraft. So, for us now, the Airbus 220 is really a game changer as one with the best efficiency and savings. We have 30 of those in the fleet now, and we had to complete rollover before the crisis. That is helping us a lot.

Also, we are still receiving three 20 family Kneels, but these are also very efficient. And in the crisis, we received new ones and we fleeted them into the overall fleet. With those aircraft we’ve been operating, and this is giving us a great advantage, I think, and this is one of the winners.

On the long haul we have learned, and this is, I think maybe surprise for some of us, is that the triple sevens have proven very efficient simply because also they have a lot of capacity, yes, but they have a lot of capacity also in terms of belly and in terms of cargo freight. We are operating all our triple sevens right now and with the cargo first strategy on the long haul, I think we have also there, a very efficient aircraft right now in the field.

With that focus, I think we are doing quite well for Swiss and I think we have to now watch what’s going to happen in the summer, as I said, as of when the passenger on long haul will also take over again. And then we will definitely adjust also level of fleet again.