During the Break conference in Bali, we listened to then interviewed Katrin Zimmermann, from the Lufthansa Innovation Hub.
Their work as a “startup within the company” can be summarized as follows:
- Digital travel apps are valued at $88bn, vs $6bn for a big airline on average
- There’s no or little loyalty, so Lufthansa need to address travelers, not Lufthansa users exclusively
- The team started in 2012 with 4 persons, now they’re 9, half from the company, half from the ecosystem in Berlin
- They scout for startups in 5 sectors (travel assistance, VR, etc) and partner with them to develop pilots
- Challenges: combining the culture of safety of the industry with the test & try of startups
Innovation and airlines: re-focusing on customers rather than just planes
There’s a paradigm in innovation in the travel space. People are still waiting in line a lot, are usually not informed, asking questions but waiting for other people to answer.
Innovation until recently has not been so much about customer experience but about flying, which is quite new, as commercial flying is only 60 years.
Today, 3bn people travel, so the focus of airlines has been on aircrafts, safety, noise reduction, environment friendliness.
It didn’t really benefited consumers too much: take food in planes, for instance. It’s typically not good, but for Lufthansa, it’s 200m F&B customers served per year so they have the same issues than McDonald’s.
Re-focusing on the customer came from a wake-up call: digital travel apps such as Trip advisor or Airbnb are collectively worth over $100bn, when an airline is worth about $10bn.
Even worse, tech giants such as Amazon or Google enter the travel space, and, for Lufthansa, it’s like “aliens entering the vertical”.
The Lufthansa Innovation Hub: a startup in the corporate
To open the view on the whole chain of travel, Katrin and four others started a series of talks with the CFO to discuss about innovation and startups.
The Board then gave them 3 months and a bit of money to test and try, the team actually rented an AirBNB, deep dived into the ecosystem and went on a global hunt for travel startups.
On top of its team, the Lufthansa Innovation Hub has a dedicated advisory board
The idea of this trendspotting was to get ideas on 5 different topics: inside the airplane, travel assistance, door to door services, inspiration & research/discovery, and virtual reality. They qualified startups with a grid and tried to develop ideas with the different companies within Lufthansa.
“We got a lot of ideas, so there was much more than what we expected”, says Katrin.
Today the team has 15 members, 50% from Lufthansa, 50% from the Berlin tech ecosystem. “Today the team has 15 members, 50% from Lufthansa, 50% from the Berlin tech ecosystem. We wanted people with a capability to bridge the gap between corporate and startup world, “so besides skills we look for personality”, highlights Katrin.
Partnering, building, and why not investing
“We were able to found a company in January this year , and focusing on 3 things:
- partnering with startups. There’s a lot of accelerators in Germany, and we thought, maybe we can bring something more than money or mentorship, such as two hundred million customers and their data
- building things on the market, we would build something far from the brand, not Lufthansa focused. Corporates are very specific bout taking care of the brand they built up, especially in air travel with safety. We wanted to tackle travelers, not just our users
- acting & thinking like a startup. We have a different position than the typical startup, and we are able to execute on the budget without any restriction.
The main challenges they face are all about importing back the startup culture in a group, as many other airliners, focused on security, which means a lot of process and validation.
Two products they have launched during their first few months are a partnership with Skyroam, a global mobile hotspot to connect users to data plans in a cheaper way than roaming, and Mission Control, an SMS-based customer service.
“With Skyroam we wanted to work on the travel need, not just the air/flight space. Then with Mission Control we produced an MVP, still a very early stage. Since you have this little computer in the hand, why not have a travel secretary? It’s now on SMS in Germany, and you can ask anything, we look it for you, and we use the most common channel of your life to deliver the answer. Not only on Lufthansa-related queries”.
For the next steps, Katrin hopes to broaden the scope of missions and maybe act as an investor: “we might be investing as well, and be more global as well”.
We’ll keep track of Katrin and her results, in the meantime, you could find useful case studies here: