It looks like Lufthansa is batting around the idea of starting up a long haul low cost carrier. *sigh* This has never worked before, but apparently Lufthansa wants to try it again. What do you think? Any chance this works

While I was excited to ride Lufthansa’s A380 last year, I was secretly looking ahead to the introduction of the 747-8. To me, that was a much bigger event for Lufthansa. Last week, the airline brought the 747-8 to LA on its first scheduled passenger flight to the airport and I was able to go check it out.

So why was it that I was excited about the 747-8 more than the A380? Because while Lufthansa rolled out its new First Class on the A380, it kept the same old angled bed in Business Class on that airplane. The 747-8, however, introduced the new flat beds in Business Class, and that is way more important for most people. I’ll get to that a little later.

This event was also a good opportunity for me to see some Lufthansa folks and talk shop. So how was it? The airplane was impressive, though I do wonder about spending time in the coach seats. Let’s start there.

From afar, the cabin looks great. The colors are very Lufthansa and the big 787-style overhead bins disappear quietly into the ceiling to leave an open feeling. The seats themselves seemed comfortable, but I only sat for a minute. It’s hard to know what it would feel like 6 hours into a 12 hour flight.

The seats do recline, but they also slide forward a little bit when you do, reducing legroom a little. The seatback screens are big and, I assume, packed with content. And the seatback has one of my favorite features, a little cupholder so you don’t have to pull your tray down if you just have a drink.

But there’s one big issue.

The seat tracks are awkwardly not aligned with the edge of each seat. So in this particular seat above, the seat anchor splits your legroom. The little inflight entertainment box on the left restricts you even more. (How did that not get buried under the floor?) But where do you put your carry-on under your seat? On your left, barging in on the person next to you? Or on the right, messing with that person’s space? Each seat has a different setup, and that’s a concern. (Thanks to Taylor Michie for pointing this out onboard.)

Now, what about the business class? It looks fantastic.

The seats look great, they’re comfortable to sit in, and since they angle out near the head, it feels pretty private if you want it to. But if you’re traveling with someone you know, then you don’t feel isolated as you do in some of the current business class seats.

The one area where there might be some concern is around the feet. Your feet really are very close to those of the person next to you, but it really doesn’t seem like an issue when you’re sitting there. The bigger issue may very well be that the person in the window seat has to climb over the aisle seat to get out. It looked a little easier than in other double seat pairings on other airlines, but it’s still the weak point of this seat.

Unlike on the 747-400, Lufthansa also has business class upstairs on this airplane, so for those who aren’t concerned about climbing over the person in the aisle, those window seats should be the best onboard with the extra ledge next to them. The upper deck has been extended again on this airplane, and because of that, it has lost some of the exclusive feel from the smaller cabin on previous models but it’s still excellent.

I asked Jürgen Siebenrock, VP of the Americas, about why LA was chosen as the second destination for the 747-8 in the US behind Dulles. He said that it was a combination of solid leisure and high business demand. The new business class has very strong appeal to business travelers (especially compared to the old angled seats), and there are a lot onboard. Up to 92 seats. At the same time, there are fewer coach seats than on the 747-400, and around 150 seats fewer than on the A380. So this fits well for Lufthansa in the LA market.

Unfortunately, I wasn’t able to fly on the media trip Lufthansa is putting together on this airplane in January, but hopefully I’ll have a chance to do it another time.

[See my post detailing the Business Class offering at Conde Nast]
[See more photos from the day at Google Plus]

Photos: Inside Lufthansa’s New Business Class – Conde Nast Daily Traveler
I was at LAX for the first 747-8 flight on Lufthansa to the airport and got a tour of the new business class cabin. Here’s a closer look.

The Secret To Small Business Success? Cloud Apps, Mobility And Human Concierges – GetApp
I was interviewed by these guys about how Cranky Concierge started and how technology played a part. I have to say that I enjoyed reading the finished product a lot.

In the Trenches: Holiday Cards and Gifts – Intuit Small Business Blog
It’s that time of year when everyone gives holiday gifts. This is always tough for me to figure out.

The EU’s Airplane Carbon Trading Program and What It Means – Conde Nast Daily Traveler
I walk through what’s been doing on with the EU emissions trading scheme and why it was suspended. (This has been one heck of a political brawl.)

In the Trenches: Customer Relationship Management – Intuit Small Business Blog
The time has come to put together a better way to keep track of our customers.

Episode 223 – Nils Haupt from Lufthansa – Airplane Geeks
I was back once again with the Geeks as a co host. This time we had the North American head of PR, Nils Haupt, on the show.

When you don’t have any new ideas in this industry but your airline needs help, what do you do? You just recycle old ideas and make them sound like the best thing since sliced bread. Throughout the late 1990s and into the early 2000s, the “airline within an airline” plan of having multiple brands in the same company took hold. If hotels can have multiple brands, why can’t airlines, right? (Huzzah!) They all failed except for one down under. But that won’t stop airlines from trying it again and again and again. This time, Air Canada is jumping onboard as are all the big European carriers. Bleh.

The original rationale for this kind of thing was that low cost carriers were encroaching on existing legacy airline turf. Because of that, the big airlines decided the only way to compete was to go the commodity route. They decided they needed to have the lowest fares in the market but to do that, they also had to have lower costs so that the venture was profitable. Piece of cake, right?

Just about every US airline save American and Northwest tried this. Everyone remember CALite, Shuttle by United, Metrojet, Delta Express, Song, and Ted? They’re all long gone because they failed miserably. In some cases, they didn’t really have reduced costs. In other cases, they were used on the wrong routes. But in all cases, they were huge distractions for the main airline that resulted in little benefit.

Air Canada Says Third Time’s a Charm
This strategy wasn’t just tried in the US either. It was pitched by consulting firm after consulting firm, time and time again. Many airlines fell for it, including Air Canada. It started Zip in 2002 to try to compete with upstart WestJet with some tired old 737-200s. You might remember seeing those airplanes – they had a different bright neon color on each airplane. But that wasn’t enough. Air Canada also started Tango, an airline that did longer flights to leisure destinations. Neither lasted long and today, only Tango lives on simply as the name of Air Canada’s cheapest published fares.

Air Canada now thinks its time for round three. Next summer, the airline will once again create a leisure-focused low fare airline. This one will even be combined with its vacation package arm. It will start with four aircraft and eventually, there will be 20 767s flying over the ocean and 30 A319s flying North America routes.

And why is it that this plan will magically solve all that ails Air Canada? Well, step 1 is that they will cram more seats on the airplane and they will have lower labor costs. Step 3 is profit. Step 2? Magic.

The idea is to fly routes that the airline doesn’t currently serve, but will that help to support the rest of the airline? Not really, and that’s what bothers me about all these schemes. They’re cramming seats in and going for low fares. If they connect people into the Air Canada network, then it’s going to be on low fares and it’s not going to be very helpful to the current airline. If it’s point to point flying, then maybe the idea is to make enough money that they can mask the failings at the rest of the airline? That’s been the strategy behind the very successful Jetstar in Australia. But let’s not get there just yet.

Europeans Love the Strategy
On the other side of the Atlantic, just about every European airline is trying to figure out how it can compete with the low cost carriers that are currently winning all the battles. IAG (owner of BA and Iberia) launched Iberia Express to take over existing Iberia routes mostly in and out of its Madrid hub. This is purely a play to lower operating costs in order to support the larger airline so it’s somewhat different than most efforts.

Meanwhile, Transavia has been carrying the torch for Air France/KLM in the low cost world. The Dutch airline has long served leisure markets from Amsterdam but it has also now established a French subsidiary to fill in for Air France too, primarily out of Orly airport.

Lufthansa is putting together its own low cost carrier plans as well. It already has a low cost carrier called Germanwings which it picked up in 2009. Germanwings does a lot of flying on low fare routes outside of Lufthansa’s main hubs. Now Lufthansa will take ALL short haul flying that doesn’t touch Munich or Frankfurt and transfer it into this new low cost carrier. Unlike with Iberia Express, the short haul flights that feed the long haul operation will still be Lufthansa in Munich and Frankfurt.

What’s the Point?
In the end, these plans always have the same purpose. Low cost carriers with their cheap labor and lower operating costs come in and eat the legacy carriers’ lunches. Leacy management decides labor costs are too high so they find a way to start a new airline with lower labor costs. Sometimes there’s an operational twist about how lean and mean the new operation will be. Then that will solve everything, right? Not quite.

In nearly all cases, this plan hasn’t worked. Airlines set up specifically as low cost carriers have the business in their DNA. They (at least the successful ones) are simply really good at keeping costs down and fares low. The ones started by other airlines don’t usually have that same level of success because there is too much interference from people elsewhere in the organization. (Oh, and there often isn’t demand for them anyway.)

The one place it worked? Australia, where Jetstar seems to be doing well. Jetstar was set up as a completely separate airline and appears to have had more separation from Qantas than other airline attempts had. But guess what? That still hasn’t done anything for Qantas itself. That airline continues to struggle mightily. It’s just that the parent company now has at least something that’s making money unlike the mess that is Qantas. Just think what might have happened if they focused on fixing the main airline instead.

Can this strategy actually help the main airline? Yeah, financially it can if they flip the thing over. Look at Austrian, which recently transferred everything over to lower cost Tyrolean. It still operates as Austrian from a customer perspective but its at lower labor rates under the Tyrolean contract. Naturally, employees hate this because management really just makes an end-run around hard-negotiated contracts. This may help the airline’s balance sheet but it guts the soul of the airline itself.

Jetstar hasn’t reached that point… yet, but every airline employee naturally looks at these things skeptically, as they should. Most of these fail and simply divert important resources from the core airline. Some succeed but without helping the parent airline. And others, as in the case of Austrian, just take the parent airline over entirely. In the end, the chance of seeing real benefit is minimal.

Just run the airline you have, please.