In the end of Sep, the Supervisory Board of Lufthansa AG, as the final and highest corporate body in the company, approved large-scale investments in the Austrian Airlines fleet.
The investments will serve as the basis for the first strategy package of Austrian Airlines entitled “Next Level Austrian“ at the Vienna flight hub as well as for the acquisition of one additional intercontinental and two additional continental aircraft. These three planes alone represent an investment value of more than EUR 100 million. As a result, more than 230 additional jobs will be created at the Vienna hub. The two Airbus A320 jets will already serve to enlarge the Austrian Airlines fleet this year, whereas the Boeing 777 aircraft is expected to first be deployed starting with the summer flight schedule 2018.
“I am pleased that the go-ahead has been given to the first package of the ‘Next Level Austrian’ strategy and thus the next step in the development of Austrian Airlines”, says Austrian Airlines CEO Kay Kratky. “The conclusion of the collective bargaining agreement for the flight crew and the positive signals from political decision makers with respect to Vienna as a flight hub ensure a good investment climate.” In the next step, Austrian Airlines is to make a decision regarding the modernization of the long-haul fleet, in light of the fact that, as is already well known, the existing fleet of long-haul aircraft will begin to reach the end of their useful economic lives starting in 2020. “In this case we will be talking about an investment sum which is clearly higher than EUR 1 billion”, adds CFO Heinz Lachinger.
Prospects for new direct flight connections originating in Vienna
The two additional Airbus aircraft from Lufthansa will mainly be deployed for bilateral German-Austrian flight traffic. In contrast, the wide-body jet in the package approved today will be used for new direct flight connections from Vienna. Destinations in Asia as well as America and Africa appear to be of particular interest. Recently, the Austrian flag carrier added new nonstop flights to Shanghai, Hong Kong and Los Angeles to its flight schedule. In addition to the expansion of the Austrian Airlines fleet the investment in a Premium Economy Class for the long-haul fleet was also approved. During the winter of 2017/18, this new class will be integrated in all intercontinental aircraft of Austrian Airlines. Already this year, the airline will begin installing Internet on board: The 31 Airbus jets will be successively equipped with WLAN as of November 2016 and subsequently tested. Starting in December 2016, Austrian Airlines passengers will be able to use Internet on board the first converted aircraft.
An overview of the Next Level Austrian Package:
- The long-haul fleet grows by an additional Boeing 777:
The wide-body Boeing 777 aircraft approved today will be leased from the Irish aircraft lessor AerCap for a period of about eight years. This represents an investment value of about EUR 60 million, including conversion costs. The original value of this jet, the world’s largest twin-engine passenger aircraft, is about EUR 200 million. Around 150 employees are required to operate such an aircraft (110 flight attendants, 30 pilots, five station employees and five technicians). Depending on the seating design, the aircraft boasts seating capacity for about 300 people, and will transport about 150,000 passengers per year. At present, Austrian Airlines operates six Boeing 767 and five Boeing 777 aircraft.
- Expansion of the medium-haul fleet by two Airbus A320:
The additional two Airbus A320 aircraft approved today were leased from the Lufthansa Group for a period of approximately eight years as well, representing an investment value of about EUR 50 million, including conversion costs. The original value of an A320 aircraft is close to EUR 90 million. A total of 42 employees are needed to operate such an aircraft (28 flight attendants and 14 pilots). Depending on the seating design, the jet features seating capacity for about 174 people, and will transport some 225,000 passengers annually. The additional capacity of the two aircraft will be deployed for the Innsbruck-Frankfurt, Salzburg-Frankfurt, Graz-Frankfurt and Vienna-Munich routes. Austrian Airlines currently operates 29 aircraft of the Airbus A320 family (seven A319, 16 A320 and six A321). On balance, Austrian Airlines operates a fleet of 78 aircraft.
Austrian Airlines introduces Premium Economy on all long-haul flights as of 2018:
- Building upon the positive experience of Lufthansa, Austrian Airlines has decided to introduce a Premium Economy Class between the Economy and Business Class rows on all its B767 and B777 long-haul aircraft. “Premium Eco” will offer passengers individual seats featuring a larger reclining angle, more seat spacing and broader seating surface. In addition, the screen for on-demand entertainment will be bigger than for Economy Class passengers, and catering will be upgraded. In terms of pricing, the Premium Economy tickets will be offered at an attractive entry level ranging between Economy Classic and Business Class rates. The aircraft will be adapted in the winter of 2017/2018 and will be ready to be deployed starting with the 2018 summer flight schedule. A total of 18 Premium Eco seats will be installed on B767 jets and 24 Premium Eco seats on B777 aircraft at the expense of Business and Economy Class. Depending on the current seating configuration, the seating capacity on the B767 aircraft will be reduced by three or fourteen seats to 211, and the number of seats on the B777 jets will decline from 308 to 302. Nevertheless, the airline expects higher proceeds. Total investments for Premium Eco will amount to about EUR 15 million.
- Austrian Airlines will offer Internet on board as of mid-December 2016:
Internet on board Austrian Airlines flights will represent a further impetus for innovation. In November 2016, the first Airbus will already be equipped with Inflight Connectivity (IFC) and tested. Following successful tests, Austrian Airlines passengers will be able to use Internet on board the first aircraft as of mid-December 2016. The entire Airbus fleet is scheduled to be upgraded by the 2017 summer flight schedule. Investments for the project will amount to about EUR 5 million. The future offering of Austrian Airlines and a technology partner is based on the latest broadband satellite technology (Ka band) and offers seamless, reliable coverage on the Airbus fleet. Passengers will be able to make use of Internet access via WLAN with their own mobile devices. In addition to simple e-mail services, it will also be possible to access more demanding applications, including streaming. Austrian Airlines will announce details on the fee model for this service at the time it is introduced. Due to the fact that many passengers consider making phone calls on board to be annoying, it will continue to be forbidden on Austrian Airlines flights.
The above-mentioned measures only represent part of the Next Level Austrian strategy package. After the restructuring, the Austrian flag carrier is expected to play a more decisive role within the Lufthansa Group in the future. Key issues will include the expansion of the long-haul network, investments in a new aircraft technology and upcoming cooperation with system partners.
“We want to more strongly exploit the cost advantages of Austrian Airlines in the Lufthansa Group, and play a bigger role in product developments”, explains Austrian Airlines CCO Andreas Otto. Austrian Airlines has already set an example in terms of innovations based on products such as á la carte catering, business class online auctions and social gifting.”