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Lufthansa Plots Strategy for More Market Share

German-based global aviation giant Deutsche Lufthansa AG (Lufthansa) is brewing a bold long-term business strategy to further tap into the fledgling but promising Chinese market, thanks to the new and more liberal Sino-German aviation pact, company executives said.

"We will boost our flight capacity to China by 50 percent from now to 2007, because of the new market-opening deal between China and Germany," said Thierry Antinori, executive vice president marketing & Sales of Lufthansa.

The senior marketing manager, however, was tight-lipped on details about Chinese destination cities that Lufthansa intends to fly.

"I'd better not give our opponents any clue about our good ideas," Antinori said.

A senior official with the General Administration of Civil Aviation of China (CAAC), the country's aviation watchdog, told China Daily recently, on condition of anonymity, that China and Germany have already reached a more open aviation agreement, granting passenger and cargo carriers from both sides more freedom to fly to each other's market.

"The new agreement is a good move, since it makes change and will strengthen relationships between China and Germany. It is in line with the robust economic relationship between the two countries," Antinori said.

Despite being quite ambitious in its new business expansion plan, the German flagship carrier makes it crystal clear that rather than attempting to make instant money, it would gradually take advantage of the new market-opening aviation agreement.

"We will take off step by step with the new market growth. Once the market growth is enhanced, we can embrace the opportunity for further business expansion," Wolfgang Mayrhuber, chairman and chief executive officer of Lufthansa, said.

"(Therefore) we will continue to maintain a gradual business expansion strategy in China. If we dump capacity, the ticket price will come down and our local business in China will become not profitable," Mayrhuber said.

The unidentified official from CAAC also disclosed that similar negotiations with more European countries, such as Spain, about possible market-opening aviation pacts will be held by the end of this year, which means maybe more competition for Lufthansa.

"No, we are not afraid. Instead, we are open to competition, as long as the competition is fair. In fact, we are not afraid of more competition. We have established our position as a global carrier, and our hubs Frankfurt and Munich are located in the centre of Europe, which give us an geological upper hand in international transfer flights," Antinori said.

To cement its status as a global airliner, Lufthansa will offer its first class passengers a new dimension in travel from December 1. Concierge services, limousine-transfer direct to the aircraft, an exclusive ambience with gourmet restaurant and personal attention for guests from arrival at the airport right through to take-off are the special features of the service.

The exclusive service starts on the ground in Frankfurt, in the newly-built First Class terminal and in new First Class lounges.

Lufthansa is leading other European competitors in China in terms of flights available locally. It flies to Beijing, Shanghai and Hong Kong from both Frankfurt and Munich as well as to Guangzhou from Munich via Shanghai and offers a total of 41 weekly flights.

Lufthansa has been cooperating with Air China since October 2000. It flies to the Chinese mainland's major hubs Beijing, Shanghai and Guangzhou (via Shanghai) through code sharing agreements with Air China.

Also through recently expanded code sharing, Lufthansa can reach second tier cities like Dalian, Chengdu, Hangzhou, Nanjing and Xi'an.

(China Daily November 29, 2004)

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