Traditional airlines don’t ever want to be caught unprepared again, as they were when low-cost carriers disrupted their gig. And Asia is where they look to for a head start on travel tech innovations. Never see legacies as geriatric ever again.
Lufthansa Group opened the first foreign offshoot of its innovation hub last week in Singapore, focusing on the future of work and how it might transform business travel. As well, it dove into the future of travel mobility.
The very next day, Singapore Airlines opened KrisLab, which will look at technology such as blockchain, mixed reality devices, artificial intelligence and data analytics to enhance its operations and overall customer experience.
Both legacy carriers have been on a digital drive, Lufthansa since 2014 when it set up its Innovation Hub in Berlin, and Singapore Airlines when it launched a digital innovation blueprint in early 2018.
Lufthansa Group’s Vice President of Digital Strategy Christian Langer told Skift in an interview in Singapore that the airline would hire four to five people, based at its corporate office in the city, to do research and seek strategic partners. This could grow to 30 staff eventually, as it wants to be embedded in the Asian ecosystem of travel technology startups, digital enterprises and academia, not just be an outsider looking in but an insider participating in the market.
A partnership with INSEAD in Singapore has already been inked, while discussions are afoot with WeWork, Grab, Singapore Changi Airport and Munich Airport to jump onboard its first focus areas in Asia.
Why the focus on future of work and travel mobility
“How we do business across distances is about to change quite significantly,” said Lufthansa Innovation Hub’s managing director, Gleb Tritus. “For example, with a high definition, virtual reality supported video conference, you won’t be able to see the difference between it and the real thing. This, in our opinion, will reshape business trips. If I can do it from my office or WeWork or a lounge at the airport, there is no need to fly anymore.
“There will be more technology substitutes to long-distance travel in the longterm.”
Asked if Lufthansa is concerned that business travelers won’t have to fly for meetings in future, Langer said, “People always want to meet personally, so there will always be people flying. But may be in 10 years, there will be new interconnection options that we can add to our business.
“WiFi onboard wasn’t a vision before. Or who would have thought one day young people could fly from Berlin to Barcelona for a weekend? The core idea is we don’t want to be surprised by any new development, technology or startup. We want to see them before they become big, expensive, successful.”
Asia is the best place to test innovations because it is the fastest-growing business travel market, said Tritus. Moreover, 59 percent of funding received in travel and mobility technology is in Asia, whose population is extremely receptive to smart phones, mobile booking and payment, compared to that in Europe or the USA, he said.
Last year, $44 billion venture capitalist funding went into travel and mobility technology, compared with $26 billion in 2017, according to Lufthansa research.
Who wants to fly airport-to-airport?
In the area of mobility, Lufthansa wants to explore how to create a “seamless intermodal travel experience” for travelers.
Said Langer, “Nobody wants to fly airport-to-airport. The only ones possibly are Lufthansa people because our offices are usually at airports! Everybody else want to start from home to their end point. Digital allows us that.”
Its Berlin hub spun off Yilu last November, a startup offering travel businesses a way to interlink various travel and mobility services, currently from different companies, onto their platform, giving clients a more seamless experience.
For instance, Eurowings clients can now book mytaxi (the equivalent of Grab in Germany) to and from the airport through the airline app. The pickup time is automatically determined from the flight information.
Lufthansa is exploring if it is possible to expand this capability further — and farther beyond Europe. It envisions seamless travel arrangements for a passenger who, say, is traveling from his home to Changi airport, then to Munich airport and the train station in Munich to Prague (for leisure), before going back to a Munich hotel for his business trip.
“Business and leisure travel are converging. So we have to converge our services as well,” said Langer.
But it is still early days. According to Tritus, for a real seamless experience, there has to be a standard industry interface. But such a standard is low in aviation, even lower in other travel sectors such as rental cars and trains. “The foundation is not there yet. We are only on ground floor,” he said.
That’s why Lufthansa wants in, and it wants to compare how mobile apps and mobility platforms in Asia are different from those in Europe, added Lennart Dobravsky, Lufthansa Innovation Hub’s trend and market analyst.
“The Grab app, for instance, is more complex, something we do not see in Germany,” he said.
How KrisLab differs from Lufthansa Innovation Hub
While Lufthansa Group looks out for travel technology trends and future disruptors it doesn’t know yet, Singapore Airlines is looking in, seeking digital initiatives to give it a competitive edge in areas such as revenue management, smart seats, virtual training and predictive maintenance for aircraft.
“The launch of KrisLab is a significant step forward in our digital transformation journey and encapsulates our ambition to be the leading digital airline in the world,” said Singapore Airlines CEO Goh Choon Phong in a statement.
KrisLab serves as “a collaborative workspace” for staff of the airline group to “co-innovate” with external startups, established incubators and accelerators. Staff may submit ideas and solutions for evaluation by the airline’s Digital Innovation Lab team. Once an idea is approved, seed funding, along with expertise provided by the lab team, will help develop it into a prototype before moving to the implementation stage.
The lab team has been working with local institutions such as Agency for Science, Technology and Research and the National University of Singapore on research in deep-tech areas.
An innovation that is being explored at KrisLab is the use of virtual reality technology to allow the airline’s designers change future cabin design concepts quickly.
Lufthansa does not see KrisLab as competing with its Innovation Hub’s plans for Asia.
“We have been in-touch with SQ’s lab team when the airline announced its overarching digital agenda [in early 2018]. Looking back at a successful history of partnership between SQ und LH Group, we in fact welcome the launch of KrisLab.
“We will both be able to benefit from every new significant player in the aviation space taking digitization seriously, in this case even strengthening the Singapore travel and mobility tech ecosystem in particular. Therefore, we wish SQ every success and is open to collaborate if there are possibilities of relevance for both parties,” said Tritus.
Lufthansa will also open another innovation hub in Shanghai, although Langer said it would get the Singapore hub up and running first.
Photo credit: From left, Lufthansa Group's vice president sales Asia-Pacific Alain Chisari, Lufthansa Innovation Hub's managing director Gleb Tritus and Lufthansa Group's vice president of digital strategy Christian Langer, launching the hub in Singapore. Photo credit: Lufthansa Innovation Hub