German flag carrier and trailblazer Lufthansa has raised the bar in first class passenger services, becoming the first airline to acquire a fleet of business jets for its burgeoning Lufthansa Private Jet (LPJ) operation.
Deliveries of the new aircraft - two light cabin Cessna Citation CJ3s, two XLS+ superlight business jets and two ex-Lufthansa Bombardier CRJ200s, which will be upgraded with 12-seat VIP interiors by sister company Lufthansa Technik - will start this month and most of them are expected to be in service by the end of the year.
Lufthansa is no stranger to innovation in pursuit of attracting and retaining high end passengers. In 2002 it joined forces with Swiss VIP charter operator PrivatAir to offer the first all-premium transatlantic service from Dusseldorf and Frankfurt to Chicago and New York. Four years later the carrier formed a partnership with fractional operator NetJets Europe to offer its premium long haul passengers business jet connecting flights throughout Europe.
NetJets terminated the agreement last year as the increasing demand for LPJ was threatening to compromise its own fractional and charter service. This decision forced Lufthansa to seek an alternative solution that would allow it to continue providing what had become "a surprisingly popular service," which attracted an average of 10 flights a day.
The carrier has enlisted the support of charter operator DC Aviation until the new aircraft enter service. The Stuttgart-based company will continue to provide lift where necessary, but LPJ will be run by Lufthansa's Zurich-based subsidiary Swiss European Air Lines.
Lufthansa's strong commitment to its high end customers has been the overriding decision behind the move to acquire new aircraft, all of which will have a tailored livery and interior design reflecting the Lufthansa brand.
"This is a nose to tail Lufthansa business, and the only way of retaining the credibility and standards of our service is to purchase and operate our own fleet," it says.
This view is supported by PrivatAir chief executive Greg Thomas. "There are two types of charter operators: those with a dedicated fleet, which are available 24h a day 7 days a week and those that operate managed aircraft that are only available at the owner's discretion. This option can be highly volatile and it is very difficult to run a successful charter operation this way," he says.
On the other hand it can be a significant financial undertaking to acquire business jets as there is a pressure to fly lots of hours to make the operation financially viable, he adds.
Lufthansa is confident that LPJ will continue to blossom. The product has evolved significantly since the early days with NetJets when business aircraft would pick up elite passengers from the carrier's long haul flights and take them to various destinations around Europe.
"We now offer passengers point to point travel around Europe in a business jet [sometimes by passing the airline altogether] which is very popular with our first class passengers," says Lufthansa.
Delivering high service standards has become the hallmark of the Lufthansa brand. The carrier admits it has spend millions of Euros on wooing highly lucrative first class passengers, introducing incentives such as a dedicated first class terminal in Frankfurt, an integrated first class terminal in Munich and a select elite club called the HON Circle, which gives special privileges to its members.
"Lufthansa Private Jets has simply become an extension of this service," says the airline.
While Lufthansa is the first airline to acquire business jets for its operations, the marriage between airlines and business aviation is not new. Delta Airlines launched a dedicated charter service, Delta AirElite, in 1984 and later joined forces with US fractional operator Flexjet to offer a tailored block charter programme. In 2001 United Airlines launched its ill-fated Avolar fractional ownership venture in which it was forced to pull the plug within months due to a lack of investment following the 11 September terrorist attacks.
The economic downturn that followed the attacks also led to the collapse in 2001 of the Business Jets venture between British Airways and international aircraft charter broker Air Partner. Fellow British carrier Virgin Atlantic was also forced the same year to put on hold its plans to launch a first-class transatlantic corporate service using Bombardier Global Express long range business jets.
Virgin has continued to eye the business aircraft market with interest and earlier this month its US operation launched an online business aircraft charter broker, Virgin Charter. The airline is remaining tight-lipped on plans to expand the service to offer point to point travel for its upper class passengers.
"We are exploring ways that we can provide a more integrated experience for Virgin customers across all of our high end businesses including Virgin Atlantic Upper Class, Virgin America First Class and Virgin Galactic," it says.
British Airways, however says it has no interest in pursuing business aviation-related services. "We have recently put out our long haul fleet order signalling our intent to focus on this area," it says.
Other European-based carriers are enlisting the services of business aviation companies to bolster the service for their first and business class passengers. In 2007 Austrian Airlines launched a partnership with Austrian charter company JetAlliance, which allows elite passengers within Europe to connect via business jet to its long haul flights in Vienna.
"This has enabled us to broaden our feeder system, primarily for destinations that have not yet been opened by us. It has been very successful and has strengthened our market position," says Austrian Airlines.
KLM offers an all business class shuttle between Amsterdam and Houston and is known to have been evaluating the market for very light jets, which would provide a feeder service for its premium passengers around Europe.
For the business aircraft manufacturers the airlines have opened up a lucrative area of opportunity, particularly in the VLJ and light jet segments.
"Exciting new technology combined with stylish interiors and low direct operating costs have been a compelling reason for the high interest in this market," says Embraer.
Lufthansa is the first airline to acquire business jets but it could be the start of a new wave of acquisitions as other airlines start to look at ways of retaining their premium passengers in the face of rising fuel prices and stiff competition from other carriers.