[Update Feb 2021]: Forward31, the company builder of Porsche Digital, acquired a stake in RYDES. Both Porsche AG and the Lufthansa Group are now strategic minority shareholders in the startup. They have also now pivoted towards mobility budget.
The way people travel in urban areas has been changing drastically during the last few years.
We’ve all experienced the shift at one point or another with the rise of automated vehicles, the digitisation of mobility and the growing popularity of sustainable transport options affecting many aspects of our everyday lives.
At the same time, Millennials and Gen Zers are placing a higher value on customer experience than previous generations.
With all these disruptions, it can be hard for traditional companies to compete and stay relevant. It’s especially challenging for airlines, which tend to focus their innovation efforts on flying rather than customer experiences.
Let’s take a look at how Lufthansa capitalised on these trends to build the world’s first trans-modal mobility rewards app geared towards Millennials.
The challenges in the airline industry
Headquartered in Cologne, Deutsche Lufthansa AG (a.k.a. Lufthansa), is currently the largest airline in Germany. Until recently it was the biggest in all of Europe, now 2nd only to its Irish rival Ryanair.
Despite Lufthansa’s success, airline profits worldwide were on the decline making it more important than ever to compete through innovation. Not just the typical airline efforts to improve their planes (e.g. less noise, increased safety, sustainability, etc.), but an actual change in customer experience.
They decided to focus on the following challenges:
- Increasing customer loyalty
- Meeting customer demand through digitization
- Finding new ways to engage with customers
Lufthansa’s Innovation Hub
With all the challenges and disruptions happening in the airline industry, innovation hubs have become a bit of a trend:
- Ryanair has Ryanair Labs
- Air France-KLM Group has Big Blank
- International Airlines Group (IAG) has Hanger 51
- JetBlue has JetBlue Technology Ventures
The list goes on and on.
So it’s no surprise that Lufthansa decided to start its own initiative in 2014: The Lufthansa Innovation Hub.
As described in their LinkedIn page, they focus on:
“The initiation of strategic partnerships between the Lufthansa Group and relevant digital companies, while also developing new in-house digital products and services.”
Armed with a team of innovation experts, tech strategists, designers, and venture capitalists, the Lufthansa Innovation Hub builds strategic partnerships, invests in travel startups, and creates new digital business models.
Since 2014, they’ve developed over 100 innovation units (e.g. research facilities, digital laboratories, incubators, and accelerators), all working towards optimizing Lufthansa’s digital capabilities.
RYDES is just one of their many successful ventures.
The Birth of Rydes
Created under the slogan “Loyal to the way you move”, RYDES is marketed as “The first transmodal reward program for millennials”.
The concept is simple: Instead of rewarding a specific type of mobility, RYDES rewards its users every time they travel (e.g. bus, intercity rail, e-scooter, taxi and even when they ride a bike).
Through RYDES, Lufthansa is providing its customers with a travel engagement platform that enables them to gain rewards while moving around the city.
So, how does RYDES work?
As described by RYDES Project Manager René Braun:
“With RYDES, we are testing a new program that stands out in three key ways: it works for all mobility providers, it is 100% digital, the rewards…can be redeemed transparently and very easily.”
Here’s how it works in practice:
- Scan or upload your ticket
- RYDES adds your points
- Redeem your rewards from a wide array of partners like Uber, Lime, N26, Airbnb, EASYJET, Flixbus, EuroWings, Ryanair and others.
- You can also redeem your points in the form of vouchers with reward partners like Amazon, fitness centers or even coffee shops.
The RYDES app even allows users to collect extra points via “Up-In-The-Air-Challenges”, where you’re rewarded with an instant gift if you upload a flight ticket from one of their partners like EASYJET or Ryanair.
Additional travel challenges focus on different types of mobility, including sustainable intercity travel where you can redeem extra points and gifts.
How did RYDES and Lufthansa bring value to each other?
Through RYDES Lufthansa was able to:
- Step outside of its core business model and experiment with new technology.
- Engage and attract new clients.
- Compete more effectively.
- Track alternative transport trends (e.g. car and bike sharing, ) as well as public transport and Deutsche Bahn services.
On the other hand, RYDES was able to:
- Enjoy the expertise of the entrepreneurial and tech-minded team at the Lufthansa Innovation Hub.
- Reap the benefits of Lufthansa’s reputation and the trust that came with it.
- Use Lufthansa resources to gain users.
- Leverage Lufthansa’s scale, to optimize their offering.
What’s next for RYDES?
RYDES is a great example of how large corporations like Lufthansa can use corporate venturing to attract new customers, test new concepts and secure their position as market leaders. The venture continues to thrive, adding new rewards partners to attract more users.
As for Lufthansa’s Innovation Hub, they have several plans for expansion underway.
Last year, they opened their first Singapore office and announced a research alliance with INSEAD business school. The research will focus on the “future of work” and how it relates to changes in business travel.
They’ve also opened an office in Shanghai with the goal of expanding their market research operations and signing partnerships with local tech players.
Their main focus will continue to be exploring the travel and mobility market in the context of digitization. We can’t wait to check out their next venture!
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