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Lufthansa Group has responded to digital disruption by creating a company within a company, Yilu. The group's low-cost carrier Eurowings has already begun using the subsidiary's tools for cross-selling taxi rides.

Lufthansa Group and its technology arm Lufthansa Innovation Hub have debuted Yilu, a subsidiary that aims to help travel brands sell their products and cross-sell other providers’s products to travelers before and during their trips.

Yilu is an enterprise software subsidiary that aims to help airlines and hotel chains add revenue streams by integrating third-party services, such as ground transportation or tours and activities, for sale to their customers.

Many tech vendors — from giants like Amadeus and Travelport to smaller players like CarTrawler, Datalex, Journera, and Travelaer — help airlines retail their own products and often cross-sell other companies’s products.

“We’re not the first ones looking at the whole travel channel and trying to make it seamless,” acknowledged Sascha Güenther, one of the managing directors of Yilu. “But Lufthansa Group is one of the largest travel companies in Europe and it has a right to play in the space, too.”

Yilu, which launched in July but has not been disclosed until now, runs as an independent unit. Its first client is Eurowings, Lufthansa’s low-cost carrier brand.

Already Yilu is powering new options on Eurowing’s mobile app to book ground transportation from the supplier MyTaxi, a Hamburg-based aggregator of taxi service worldwide. The company invented a way for MyTaxi’s content to become bookable on Eurowings’s app via a new API [application programming interface, or method of flexibly exchanging data].

While Yilu’s first client Eurowings is a sister Lufthansa brand, the new company intends to work with a variety of airlines, hotels, and other travel suppliers.

eurowings at stuttgart-airport

A Eurowings aircraft is on the tarmac at Germany’s Stuttgart Airport. Eurowings’s mobile app is the first to use tech from new parent company Lufthansa Group subsidiary Yilu. Source: Eurowings.

The rather basic, white-labeled integration with Eurowings is only the start of what the Yilu hopes to do. The name Yilu is a transliteration for the term for the whole journey in Mandarin, which Güenther said fits with its goal of becoming a “smart end-to-end travel platform.”

“Over time we’ll build tools that will help rearrange a customer’s trip by offering a relevant rebooking recommendation if, say, their train has been canceled,” said Mark Meusch, co-founder and managing director of Yilu and head of digital innovation at Lufthansa Group.

Yilu aspires to integrate with a network of service and data providers, to learn from user behavior to finetune its product recommendations, and to share with partners insights on how to sell smartly.

Today Yilu has 25 workers in a WeWork in Berlin’s Potsdamer Platz. But by year-end, it will move to its own office elsewhere in Berlin. It’s hiring for 10 positions, and it aims to add another 10 jobs within the next year.

Birth of a Tech Company

About a year ago, executives at both Lufthansa Group and Lufthansa Innovation Hub decided the best way to approach the retailing problem was to create a company within a company to create solutions for it. They hired the consultancy BCG Digital to help create the initial structure and staff.

Lufthansa Innovation Hub is the airline group’s center for digital experimentation. It’s part of the airline group’s effort at embracing technology that has been led by Christian Langer, chief digital officer at Lufthansa Group, who spoke at Skift Global Forum in 2017 about his vision.

The Hub’s developers have created open interfaces so that third-party engineers can use Lufthansa’s content in fresh ways. Its engineers have also retooled various passport systems for the frequent flyers of the Lufthansa airlines and invented an automated check-in system that particularly helps customers flying with their competitors.

It can now add to that list of work “company building.”

Other airlines have taken different approaches to innovation. JetBlue has focused on strategic investment in companies with established products and business models. Others, like EasyJet and El Al, have partnered with third-parties to create startup incubators and accelerators.

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Tags: incubator, lufthansa, Lufthansa Group, startups, startups europe

Photo credit: On the left is Sascha Güenther, one of the managing directors of Yilu, and on the right is Mark Meusch, co-founder and managing director of Yilu and head of digital innovation at Lufthansa Group. Yilu

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