Frank Naeve is the senior vice president, Global Markets and Stations, Lufthansa Group. In this interview with Ifeoma Okeke-Korieocha, he speaks on the airline’s 60 years of operation in the country, its achievements, challenges, the current state of the nation’s aviation sector, the issue around foreign airlines’ trapped funds, among other topics. Excerpts:
You’ve been in Nigeria for the past 60 years, and that’s a lot. A lot has happened and changed over the years and you’re still here with us. How has the operation of the airline been? How have you been able to transcend with happenings in the country?
I think it is a great example of the commitment we have to this market. It is reflected in this very long time that we have been active here; not only in the service we provide for passengers, but also in the cargo business – bringing goods into Nigeria and back out. An important factor of that is really trying to understand the market, and how to be successful in it. A big part of that is having a strong local team that understands what needs to be done, what services and products are required for the Nigerian market. You have to be committed and you have to work with stakeholders in a constructive way to try to find solutions when issues arise. The Lufthansa Group in Nigeria, and in so many other parts of the world, is focused to add value for its customers.
For the stakeholders as well, we believe we are a good corporate citizen. We offer jobs. Every time an aircraft lands anywhere, it creates positive effects for many partners connected with our destination. Nigeria is very important, also strategically as part of our overall African strategy. It is a very dynamic and growing economy, with a young population of well-educated people. You know, that all plays into that.
So, in all these years you’ve been operating in Nigeria, what would you say is your major milestone or achievement?
The fact that we are one of the few international carriers to operate to three cities in Nigeria, with Lagos, Abuja, and Port Harcourt, is one important advantage. We were also very early in developing the destinations outside of Lagos, contributing to the various corporates in Nigeria in terms of supporting them to reach new markets.
We also focus on the very large Nigeria diaspora that is around the globe, bringing together and connecting families in both directions. That fits nicely to our purpose at Lufthansa Group, which is to connect people, cultures and economies in a sustainable way. I think we bring that to a significant extent also in Nigeria.
Operating in an environment like Nigeria is bedevilled with a lot of challenges; from infrastructure deficit, to unavailable aviation fuel. So, how are you able to weather these challenges? And what do you think can be done to make your operations better and seamless in Nigeria?
I think it is no secret. You have to engage with the local market to be able to face some of the challenges. We have to engage not only with the market, but also with important stakeholders, be it airports or government agencies, and to do this based on trust and integrity. For this, you need a good local team. One of the key success factors over the last 60 years is that we have had good teams with our local staff, who understand the market perfectly, and who are able to help us meet the challenges that you describe.
There is not a secret formula that says, you can wave a wand. It is really a lot of hard work and a solution-minded approach that we need at the end of the day. Nevertheless, as Lufthansa Group, we can make use of a lot of experience and best practice solutions from other 300 stations around the world.
In terms of our own services, now, we do improve our digital services, not only in Nigeria, but globally. Here in Nigeria, we try to make the customer experience on the ground as pleasant and as seamless as it can be. There is a lot of effort being put into improving the customer journey.
With our commitment to Nigeria, one of our absolute strategic markets in Africa, we hope and are confident that we will get back to the normal trade standards
Airlines are just trying to recover from the COVID crisis which ravaged the whole world, and I believe Lufthansa is not alien from this. Many airlines even had to downsize at the time. Then there are the current global economic challenges. I do know that some of the effects of COVID-19 still stay with the airlines. How are you able to manage these challenges?
I agree with you, but it is not just the airlines, but also the aviation industry as a whole, which is still suffering from the after-effects of COVID. That is coupled with a significant or even strong increase in demand for air travel. I think maybe we should not underestimate the basic need of human beings to connect with others and the inherent value of being able to travel, mobility, and to meet each other in person, not on a screen.
More than ever, you have to be flexible. The demand for flexibility has increased since the crisis, enabling us to deal with topics that come up. Secondly, it is important to have a very strong customer focus: what do we need to do in the current environment to offer the best possible customer service? Lufthansa has a significant investment program, both in terms of new aircraft, onboard products, but also digital services, as I mentioned before, and really using the momentum of the good demand to achieve those goals.
In addition to some of these challenges, let’s bring it down to Nigeria. We have a peculiar challenge – the trapped funds, which IATA put at over $500 million. At one point, Emirates even had to pull out. So, are you here trying to solidify your operations in Nigeria, or would you at some point also pull out as Emirates has done?
No, we want to stay here. I think the first point is we cannot comment on what other airlines are doing. Being committed to the Nigerian market since 1962, we certainly hope that this situation can be resolved through discussion. Various industry groups are also talking to the Nigerian government on the problem of trapped funds as the German government did as well. We believe that a solution is possible through dialogue. Obviously, we closely monitor our financial risk of having the trapped funds here in Nigeria. With our commitment to Nigeria, one of our absolute strategic markets in Africa, we hope and are confident that we will get back to the normal trade standards.
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You mentioned that you’re looking at ways to reduce the financial risk, what ways are you looking at?
With the current level of the trapped funds, we have various tools that allow us just to keep that risk locally within a manageable framework. I guess it is a normal approach for any company as it has some impact on our business. However, we will remain committed to the Nigerian market.
How do you think you can help in the growth and development of the aviation sector in Nigeria?
Wherever we operate, we try to deliver positive contributions to the development of the destination we fly to. We are ready to engage with the industry and with the various stakeholders in order to bring across whatever expertise we think might be helpful and supportive. IATA is represented here in Nigeria; we have always worked very closely with IATA on many industry initiatives. We talk to airports. Later I will be meeting our ground handling agents who work for us, but then also for other airlines. We have a strong contribution to make, and I believe that is something that we have been doing consistently for the last 60 years in Nigeria.
What place is the Nigerian market in Lufthansa ranking when compared to other African markets? How big is this market?
As I said, Nigeria is one of the most important markets in Africa. I would not want to put a number to it. If you have a look at the structure of the market, Nigeria meets many of the criteria that make it so important. One aspect is a strong corporate base. Also as a German company, German companies have been active in Nigeria already for hundreds of years, since the 1860s. Obviously, the energy sector is key to our network, and we offer good connections to not only North America, but also within Europe. Second point is the leisure market, with the large Nigeria diaspora, not only in the US, but also in Europe, being able to offer those connections. That is a second big pillar.
Finally, the third aspect is the air cargo demand; you know our ability there to offer really high-quality transportation services. Those things all together just make Nigeria a very important market. This adds the economic development, its dynamism that reigns here and the investments – all of these things put together make this market very important to the Lufthansa Group.
I’d like to know about the passenger trends. I do know that Germany is somewhere that an average Nigerian wants to go to study. I’m not sure about tourism. So, I’d like to know if there are trends that people could look out for. What destinations do you think you can promote in this regard using Lufthansa?
We definitely see continued strong demand to the United States that is probably partly students, and customers visiting family and friends. That is something that we are strong with, even throughout the crisis, as long as travel was possible. We did quite well.
However, if you ranked the top destinations, maybe Germany would be part of the top five tourist destinations. Recently, we see many people discover Germany. There is also a lot of medical tourism, a very important travel group from Nigeria.
Finally, there is something else in Lufthansa German airline; we are like a hub. We are really opening up the world via our hub in Frankfurt. People come to us to transit, and they can go everywhere, and especially during these times as they can experience our new tourist destinations. We have discovered and opened up many tourist destinations, in Europe, the Asian Pacific and North America. Nigerians are big travellers who like to discover the world, and we are offering them easy one-stop hub connections.
After COVID, many people expected corporate travel to recover only very, very slowly. There were some scenarios that corporate travel would only recover to 50 percent. That is not what we are seeing especially out of Nigeria, but also in other markets, we observe a very solid rebound of corporate demand, because personal meetings are key. As good as these virtual meetings are, at some stage you need to meet, if you want to do business. If you want to join or to sign an agreement with another company, if you have production facilities in other places, personal interaction has real value, all this is driving a rebound in corporate demand, higher than they originally expected.
Are there any new products you’re bringing on board, beyond just flying?
I think one strong focus is trying to make the travel experience as comfortable as it can be, not only in terms of the physical travel experience. One important part is also the digital experience. For this, we are investing a huge amount of money, not just in terms of making it more efficient, but also making it more attractive for our customers. So, during the inspiration phase of the travel planning, somebody is thinking ‘I want to go somewhere,’ right? For us, we try to make that phase as interesting as possible, convincing this person to take a decision for Lufthansa Group, being the right choice.
This digital space needs to be interesting also for the customer, and not just be a simple process. Quite clearly, what we are looking to do is to upgrade our product portfolio. On the hardware side, invest massively in new seats. In the next few years, we will get brand new seats in all of our long-haul aircraft and that will increase the comfort.
The third point that I would like to address is a strong demand from customers for sustainable travel options. Airlines have a strong role to play in terms of offering credible options that allow travellers to compensate for the Co2 that they are producing. There are various ways to go in that direction. We are one of the leading airlines in terms of developing those options. We do not only focus on the whole issue of comfort or something luxurious, but it does address the strong need of our customers to reduce their Co2 footprint.
Globally, we’ve seen technology taking hold of travel; we’ve seen airlines introduce things like biometrics. So, I’d like to know, are you looking at introducing some of these technologies in Nigeria any time soon?
We look very much at these technologies too, but currently we have no plans yet for Nigeria. When you talk about biometrics, it is not something that we can introduce at a destination alone. We need to collaborate with other stakeholders, including the airports and government agencies, because one of the major topics with Biometrics is data security. This requires a very comprehensive framework in terms of how to deal with that and a number of stakeholders to introduce it. Our customers should benefit from the advantages of these new technologies as well.
In the US, we already have this equipment for biometrics. We have worked with a number of agencies, including the TSA to make that possible. With this gained experience, we also see this introduced soon within the European Union. If this proves to be effective, I could imagine a rollout in other parts of the world. However currently we have no plans to introduce this technology yet in Nigeria.
Are there plans you have put in place to reduce carbon emission – is this something that you’re looking at?
Yes, of course. We have a very comprehensive plan. We have dedicated teams in various parts of the world. You might know that Lufthansa has said that it wants to halve its Co2 emissions by 2030, and then reduce it completely by 2050. Currently, one of the main initiatives is fleet renewal. Modern aircraft have savings of 20 to 25 percent on Co2 emissions that are valid for both short hauls and long-haul aircraft.
That is one pillar. The second one is sustainable aviation fuels. We are the largest buyer of sustainable aviation fuels in Europe. One issue with sustainable aviation fuel is the limited availability because there is not enough of it being produced. We are talking with various companies as well as government agencies to make this specific fuel more available.
We are also working with various partners to develop new technologies in this field. The whole topic of sustainability is one of the defining challenges of the aviation industry as a whole. It is not just the airlines, but also anybody involved with aviation. That is probably one of the top two or three challenges and at the same time, opportunities that we have. Most certainly at Lufthansa Group, we want to be very proactive about it. We want to make sure we have solutions that we can drive and also implement.
