Sky-high tech thinking

With German national carrier Lufthansa on route for a mammoth technology overhaul, we hear from Dr Christoph Klingenberg, the new Head of Information Management and CIO of the airline’s passenger business.

“Lufthansa will switch over its ticketing system in 2010”

Dr Christoph Klingenberg has only been behind his new desk as Lufthansa's Passenger Airline's IT chief since April but his in-tray is already overflowing. With his predecessor Christoph Ganswindt swapping Lufthansa for Deutsche Telekom, Klingenberg is busy getting to grips with transferring a huge IT infrastructure migration project amid probably the toughest economic periods ever seen for the airline industry. Nevertheless, a buoyant Klingenberg has a clear vision of his role ahead. "The expectation is that I can strenghen the bridge between the various functions and the IT people" he remarks calmly. It is certainly too early to judge whether I have achieved this but it is certainly my aspiration."

Prior to his latest appointment he was Lufthansa's Senior Vice President of Direct Services for four years, responsible for the for the planning and operation of all Lufthansa domestic and European direct flights not routed through the company's Frankfurt and Munich hubs. And although he has a computer science background from his time spent at university, he joins a growing list of business executives being handed top tech jobs across Europe. It seems that having purely an IT career is not always a golden ticket to the best CIO and CTO roles out there as organisations seek out business savvy individuals who can carry over their skills and experience to the world of technology. And with Klingenberg having worn various hats during his 13 years at Lufthansa, this no doubt furnishes him with a greater holistic overview of the airline's operations.

Klingenberg also reveals that it certainly "tempting" to become a very much hands-on technology chief but he foresees the role being much more about steering the IT function in the right direction. "It's about setting the IT strategy and setting the rules for an architecture so you know what the systems we employ will look in five to 10 years time. It's also about the path we take to get a more consistent computer and architecture landscape, as well as what governance rules we should establish to arrive at that plan."

IT Migration

The bulk of his work (as it was with Ganswindt) is focused on the mammoth Common IT Platform Initiative (CITP) - a multi-million euro project powered by Amadeus to migrate Star Alliance partners' loosely connected IT infrastructures to a common platform. The goal of the CITP is to better serve customers, slash IT costs and boost the speed of launching new products to market. The switch over has been carved into three key parts, with the first achieved 18 months ago when the old inventory systems were migrated. This first stage alone reduces Lufthansa some IT-costs considerably. "The ticketing function will be moved over in November 2010," Klingenberg explains, "and one or two years later we plan to migrate the whole of the departure control systems, such as check-in and flight handling at the airport."

For this IT chief the benefits have been clearly visible thus far: "It has already been a huge economic benefit to migrate the first step," says Klingenberg. "The other steps will bring lots of new functions, such as being able to could accommodate customers much faster at the airport or offer for example dovetailed services to the different frequent flyer programm users travelling with different status levels." CITP will also the 21 full Star Alliance members better respond to market conditions and change class usage or schedules quickly to improve yield. 

Like many of the legacy carriers dominating the skies, Lufthansa's IT systems, especially those that handle departure control and check-in functionalities, need to be switched on the long run. Indeed, some of its older systems are between 15 and 30 years old, which creates maintenance and upgrade problems amongst other challenges. Lufthansa was one of the first Star Alliance partners to shift its inventory system to the CITP, which was a deliberate move according to Klingenberg. "Instead of being a late follower of developments that we could not shape, we thought it would be a good idea to shape this development and partner with Amadeus in order to get a system that would suit our needs. We can exert a lot of influence to get our functions and processes into the new system, but of course this is much easier to get done if you are first company to migrate rather than the 25^th."

As well as CITP, Klingenberg is also busy with the self-service check in functionality, designed make life easier for passengers, as well as improve efficiencies and cut costs for the airline. In Frankfurt manual check-in capacities have been reduced for economy class passengers as they can check in using the internet, their mobile phones or the kiosks at the airport, which has created "big value" for customers and the airline according to Klingenberg. He adds: "The customer can be master of his own destiny and it is value for us because we can free up resources at the airport reducing those manual check-in functions." So how has the response been from customers? "Generally, it has been very positive," he notes. "It has been especially positive response from those who are checking in and reserving their seats using their internet-enabled phones whilst on the move." To keep Lufthansa operating smoothly the passenger airline wing of the group is powered by some 200 systems managed by 400 staff. Lufthansa opts not do programming and coding in house; instead these functions are outsourced to the likes of IBM, Amadeus and Lufthansa Systems.

Haircut

The CITP and transition other new technology implementations coincide with a period where the airline industry is sustaining a severe battering from the turbulent economic conditions of the past two years. The recession and cuts in corporate travel, combined with extremely volatile fuel prices has grounded some carriers and left the likes of British Airways with mounting losses and staff layoffs. Like any industry the airlines need to cut costs were necessary, and Lufthansa is no different in that regard. "Our [IT] budget has had a haircut of 10 percent, which means we are mainly cutting external expenses," the CIO remarks. "All the IT projects have to jump some tough economic hurdles, and the payback has to be within a couple of years but we identified some projects that we could postpone without much harm to the business. And we feel it is valuable to have the know how, especially when it comes to supporting all the big projects we have here."

In these lean times where ever euro counts IT can sometime feel the force of budget cuts as a prudent CFO takes a tight hold of the company's purse strings. Without technology, however, the airline industry would be crippled. "You won't find a manager in the airline business who tells you that IT is an unnecessary expense," Klingenberg states. "Our CEO has been a huge promoter of the CITP, for example. He sees it as an enabler for consolidation.

Every airline has their own IT system and they don't really talk to each other. So problems can be overcome once we migrate a lot of airlines to the new Amadeus system. I would say it has been rather easy to convince top management to free the funds to support this project," Klingenberg concludes.