Lufthansa will launch its premium economy service into the Middle East later this month, it said on Sunday, aiming to go head-to-head on quality with Gulf-based rivals.

The German carrier has often been at the forefront of a war of words between established Western airlines and their Gulf competition including Emirates, Etihad and Qatar Airways.

The latter trio have grown rapidly by offering high-end service to wealthier customers including in-flight showers and butler service. This expansion in the eyes of Lufthansa and others has been augmented by state subsidies which go against the Open Skies agreement aimed at liberalising air travel - allegations denied by the Gulf airlines.

Although critical of their growth, Lufthansa is now attempting to compete with the Gulf airlines on similar product offerings, with premium economy beginning on Oct. 25 for Middle Eastern routes.

It has already rolled-out the service, part of a 3 billion euro ($3.4 billion) global investment, to American and Asian routes and aims to have it on all intercontinental destinations by the end of 2015.

"We're convinced that all these investments will put us in a good position with our competitors," Lufthansa Group's regional director for Gulf, Iran, Pakistan and Afghanistan, Karsten Zang, told reporters at a event in Dubai.

Zang hopes the investments will lead the carrier to be the "first five-star airline in the Western hemisphere".

Lufthansa is banking on increased revenue from a larger premium class customer base but Zang did not say what the impact would be or what targets have been set.

Hit by on-going pilot strikes over early retirement issues that led to 1,000 cancelled flights in September, Lufthansa is pushing ahead with a cost-cutting overhaul with a streamlined management structure it said will boost profit by 500 million euros ($564 million) a year.

Zang said that because the airline is keeping its customers informed in an efficient matter, people are getting to their destinations.

"We don't see a huge impact yet," said Zang.- Reuters