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Lufthansa Keep Losing Money On European Market  
User currently offlineLIPZ From Austria, joined Jun 2006, 1075 posts, RR: 0
Posted (3 years 4 months 2 weeks ago) and read 15086 times:

Lufthansa Group's CEO, Cristoph Franz, told ATWOnline that the carrier keep losing on European network.
Next move is to try to bring it back to the black.


Lufthansa is making every effort to bring its European network business back to profitability, CEO Christoph Franz told ATW.

Speaking on the sidelines of the IATA AGM in Singapore, he said, "Our European network is loss making and we hope to change this as soon as possible." He added that LH incurred a multi-million euro loss on European routes in the first quarter.

[....]

"We see passenger numbers growing," he said. "Our goal is, of course, having all of our business segments profitable" including European network services.


(Full Story)
http://atwonline.com/airports-routes...ring-europe-routes-back-black-0608

88 replies: All unread, showing first 25:
 
User currently offlinegarpd From UK - Scotland, joined Aug 2005, 2686 posts, RR: 4
Reply 1, posted (3 years 4 months 2 weeks ago) and read 14924 times:

Probably because they're too friggen expensive!

It can cost up for £400 to fly from Edinburgh to Frankfurt in Y!



arpdesign.wordpress.com
User currently offlinePanHAM From Germany, joined May 2005, 9524 posts, RR: 31
Reply 2, posted (3 years 4 months 2 weeks ago) and read 14791 times:

Or 99€ or even up to 800++€ depending on the load factors and how early / late you book.


But for that money you have no extra surprises like baggage, you get an assigned seat and when you have no bags you don't even have to wait in line for check-in.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 3, posted (3 years 4 months 1 week 6 days 23 hours ago) and read 14633 times:

Quoting PanHAM (Reply 2):
But for that money you have no extra surprises like baggage, you get an assigned seat and when you have no bags you don't even have to wait in line for check-in.

Fair enough......but for the price LH charge I'll gladly pay for baggage if I require it, couldn't care less whether my seat is 'assigned' or not and if I have no bads I don't have to wait in line on Ryanair either!
What were you saying about 'extra surprises' again? If you think such is worth it, feel entirely free to fly them!


User currently offlineB747forever From Sweden, joined May 2007, 17078 posts, RR: 10
Reply 4, posted (3 years 4 months 1 week 6 days 23 hours ago) and read 14615 times:

But even though their short haul network makes a loss, doesnt it help to make their long haul network profitable?


Work Hard, Fly Right
User currently offlineCaptainCrackers From New Zealand, joined May 2010, 127 posts, RR: 1
Reply 5, posted (3 years 4 months 1 week 6 days 23 hours ago) and read 14554 times:

Quoting B747forever (Reply 4):
But even though their short haul network makes a loss, doesnt it help to make their long haul network profitable?

Using your long-haul network to subsidize your loss-making short-haul network certainly helps keep the competition at bay, and that's the only reason we get to fly anywhere on LH for €99 return.

It will be interesting to see how Franz wants to return his short-haul business to profit without raising fares and risking the likes of AB taking over more routes...


User currently offlinePanHAM From Germany, joined May 2005, 9524 posts, RR: 31
Reply 6, posted (3 years 4 months 1 week 6 days 23 hours ago) and read 14461 times:

Quoting AirNZ (Reply 3):
Fair enough......but for the price LH charge I'll gladly pay for baggage if I require it, c

well, I forgot to mention that they fly you to an airport in a populated area, save you from driving 100 or 200 km and much more. As a status customer I can even use the lounge when travelling on a € 99 ticket. It is all a matter of when you purchase the ticket. Compare the same day price FRA-LHR vs HHN-STN with the same day price of FR and then add to the FR price the cost of driving to and from a remote airport (in my case that would be 250 km @ € 0,80/km, costs for baggage, and the cost for hotel, because I can make a same day return to LHR but need 2 days in case of STN. Even without fully valuing my time, LH will be cheaper in C than FR in FR class. I do not even argue of having to stand in line at FR check in whereas I do not see a line I have to wait in when flying LH.

Quoting B747forever (Reply 4):
But even though their short haul network makes a loss, doesnt it help to make their long haul network profitable?

They feed their long haul with the short haul flights and those are the crocodile tears they are shedding. Whenj I look at what I pay with BA for connecting through LHR on a long haul, they are often cheaper than originating drom LHR, same goes for LH of course through their hubs. That does not leave much room for pro-rating but in total they make a profit on such customers as well.

It's all a matter of allocating the income and I think LH does it right the way they are doing it because that gives them the incentive to produce even more efficient on the short hauls and be more competetive.

As long as people pay the € 800 or more on European flights because the time and the connection fits the travel plans they make a profit on the € 99 tickets as well since these would otherwise be empty. Simple and nothing new.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineCaptainCrackers From New Zealand, joined May 2010, 127 posts, RR: 1
Reply 7, posted (3 years 4 months 1 week 6 days 22 hours ago) and read 14306 times:

I think FR's success proves that a lot of people are willing to forego lounge access, assigned seating, and the need to drive cars big enough that they cost €0.80 per km to operate for cheaper airline fares. Your personal mileage may vary, as they say.

But that is a bit beside the point. Franz says he's going to start flying 50-seaters on some European routes, which will reduce capacity. Costs are increasing, not decreasing. Fares are going to have to go up. Will most passengers want to pay extra? Probably not.

LH has seen increased passenger numbers BECAUSE it has been, for want of a better term that the EU market doesn't usually reserve for the likes of EK, price dumping. Will they be able to continue this practice, given their reduced capacity and their rising costs? I doubt it.


User currently offlineOyKIE From Norway, joined Jan 2006, 2754 posts, RR: 4
Reply 8, posted (3 years 4 months 1 week 6 days 22 hours ago) and read 14180 times:

Quoting LIPZ (Thread starter):
Lufthansa is making every effort to bring its European network business back to profitability, CEO Christoph Franz told ATW.

I am surprised that LH is able to be as competitive as they are. They have a completly different approach than LCC, and I would happily fly LH over an LCC any time. Even if the cost is initially higher, the overall cost may not be as different.

In Flight International, Danish Air Transport CEO Jesper Rungholm was quoted saying that LCC's misleading fares and their success in doing so, shows just how easily fooled we are.

I would expect that with new seats (more seats onboard) that might turn LH into a profit?



Dream no small dream; it lacks magic. Dream large, then go make that dream real - Donald Douglas
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17651 posts, RR: 46
Reply 9, posted (3 years 4 months 1 week 6 days 22 hours ago) and read 14141 times:

Quoting PanHAM (Reply 2):
But for that money you have no extra surprises like baggage, you get an assigned seat and when you have no bags you don't even have to wait in line for check-in

but for how long...? I bet it's only a matter of time before the EU majors start copying the US majors in terms of ancillary charges.



E pur si muove -Galileo
User currently offlinePanHAM From Germany, joined May 2005, 9524 posts, RR: 31
Reply 10, posted (3 years 4 months 1 week 6 days 21 hours ago) and read 13873 times:

Well, the high fares of LH are aimed at the business traveller who pay these fares when travelling on short notice. From where i live I could not make a trip on an LCC to any place in Europe and be back in the evening. From FRA I can reach all of Europe on a morning flight and sleep at home. hat saves at least € 100-150 depending what your destination is in hotel accomodation and € 0,80 a km includes the cost of ownership, which many people simply forget. It is more than just the petrol. Most important is, the average executive travelling costs the company about € 1000,00 per day, some less, many more.

Unless they live in places like CGN or BER the companies lose money on cheap LCC fares. Very simple math.

Quoting CaptainCrackers (Reply 7):
Costs are increasing, not decreasing.

costs per seat mile yes, but fying 70 seats empty vs a fiull 50 seater would go in favor of the 50 seater. Besides, AFAIK, LH s phasing out their 50 seaters and the smallest in the feeder fleet should be around 70 seats .

I could imagine that the hub flights are operating in the black. LH has to cope with the fact that, unlike the UK and France, Germany is polycentric. While BA has given up the provinces almost completely and AF just reduced LYS, LH is keeping a good presence at the major centres in Germany. DUS has 54 European destinations and serves as a tertiary hub, feeding long distance flights from many of these 54 cities in Europe. HAM and STR have string networks as well and BER will be build up once the new airport is in operation and be that only to keep AB at bay. Which may be bad for profits but good in the long run.

My opinion is, that this is the better, if not the best strategy of the 3 major European carriers. They don't leave the field for the LCCs and offer a good alternative.



Quoting MaverickM11 (Reply 9):
I bet it's only a matter of time before the EU majors start copying the US majors in terms of ancillary charges.

Well, the US carriers would be well advised to copy the European majors. But it bis not a valid comparison, in the US TSA chokes airlines to death whereas here the security checks are quick and reasonable.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineavek00 From United States of America, joined Oct 2004, 4405 posts, RR: 19
Reply 11, posted (3 years 4 months 1 week 6 days 21 hours ago) and read 13561 times:

It's only a matter of time (3-5 years, tops -- maybe less time than that if fuel costs skyrocket again) before the European legacies copy the short/medium-haul practices of legacy airlines that operate in the world's most advanced air market -- the United States. Whatever the sentiments of USA legacies nickel-and-diming pax with ancillary fees for domestic/Canada/Caribbean trips, the cold truth is that the fees have put billions of dollars into their coffers, and has made intra-North America flying economically sustainable as a standalone item and not merely dependent on subsidies from longhaul.


Live life to the fullest.
User currently offlinejust7four7 From Hong Kong, joined Oct 2009, 66 posts, RR: 0
Reply 12, posted (3 years 4 months 1 week 6 days 21 hours ago) and read 13533 times:

Sooner or later the last few Euro legacy carriers such as LH will face euro network extinction, and the simple reason is the higher cost structure, no way around it. Am sure LH can survive the next 10 years well enough on intercont alone. But how to feed it then?

Economy of scale is one answer. But, in comparison to the AF/KLM and BA/IB groups, LH is facing a difficult situation. The various shares and ownerships into smaller local euro carriers (AUA, Brussels, BMI), does not render similar efficiencies (except Swiss). Sooner or later LH needs a sizable single euro merger partner, but who is left? SAS, Turkish?

Turkish hasn't quite reached its peak. Until they do, they want to grow, not merge. Besides, it may not fit with LH. SAS is not a very big price anymore, it has its own survival problems.

I see near-future fundamental problems for LH, sadly.


User currently offlinePanHAM From Germany, joined May 2005, 9524 posts, RR: 31
Reply 13, posted (3 years 4 months 1 week 6 days 20 hours ago) and read 12935 times:

Quoting just7four7 (Reply 12):
Sooner or later the last few Euro legacy carriers such as LH will face euro network extinction,

Aha, interesting thesis. And who is flying internal Europe routes from major airports then?



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17651 posts, RR: 46
Reply 14, posted (3 years 4 months 1 week 6 days 20 hours ago) and read 12848 times:

Quoting PanHAM (Reply 10):
the US carriers would be well advised to copy the European majors

Copy what? Losing more money domestically/regionally? EU/US carriers can only do so much on the cost side--the missing piece on the EU side is additional revenue opportunities, ie fees.

Quoting avek00 (Reply 11):
It's only a matter of time (3-5 years, tops -- maybe less time than that if fuel costs skyrocket again) before the European legacies copy the short/medium-haul practices of legacy airlines that operate in the world's most advanced air market -- the United States

  



E pur si muove -Galileo
User currently offlineFlighty From United States of America, joined Apr 2007, 8629 posts, RR: 2
Reply 15, posted (3 years 4 months 1 week 6 days 19 hours ago) and read 12333 times:

Europe is still in the early / middle stages of LCC revolution. LH has more of a "captive" home market than for example US legacies. But it still won't compete so well within intra-EU services. They have a nice product which assumes a certain ability to set prices.

User currently offline328JET From , joined Dec 1969, posts, RR:
Reply 16, posted (3 years 4 months 1 week 6 days 19 hours ago) and read 12331 times:

A lot of their european routes are feeder flights to/from their hubs anyway.

I think they are on a good way by increasing the average size of their airplanes and also by increasing the number of seats on their existing fleets.

Probably the shut-down of Lufthansa Italy and the introduction of further ordered CRJ900 and ERJ195 will improve the economics further more.

 


User currently offlineTalaier From Spain, joined May 2008, 490 posts, RR: 0
Reply 17, posted (3 years 4 months 1 week 6 days 19 hours ago) and read 12086 times:

It's only a matter of time (3-5 years, tops -- maybe less time than that if fuel costs skyrocket again) before the European legacies copy the short/medium-haul practices of legacy airlines that operate in the world's most advanced air market -- the United States. Whatever the sentiments of USA legacies nickel-and-diming pax with ancillary fees for domestic/Canada/Caribbean trips, the cold truth is that the fees have put billions of dollars into their coffers, and has made intra-North America flying economically sustainable as a standalone item and not merely dependent on subsidies from longhaul.

Agree.I think this just another proof of where the European aviation market is heading. LH has two choices: either it reduces it's short-haul operation in seats (and possibly service) by introducing smaller aircraft which get filled with connections, business pax on short-haul and the odd point-to-point flyer prepared to pay a premium and thus turns a profit out of it or it keeps a large-scale short-haul operation afloat with profits from longhaul.

From a shareholder's perspective, the first one makes most sense since that is what will optimise profits. Hence where all the carriers are heading. Some of them have chosen to create low-cost subsidiaries to ensure they don't lose market share (eg. IB with VY) and still feed their long-haul from places were not even a 70-seater can pull it off.

If you look at how IB is developing its operation, it has created VY to fight FR and EZ heads on and then transferred all its other critical European markets that cannot sustain a 320 to Air Nostrum (YW) it's regional subsidary. That means pax flying from VIE, DUB and a wealth of other destinations can fly J short-haul or connect to long-haul in MAD with the same brand but not the same company: YW is specialised in regional flights and can pull those flights off with a 90-seater whilst IB is stuck with a 320 flying at a loss. And even then IB had to get rid of in-flight service due to the savage competitiveness of the Spanish domestic market which is unparalleled in Europe - a combination of high tourism and a large geographical extension (Spain is Europe's second biggest country after France) make air travel a large-volume mode of transport even with high-speed trains, something that doesn't occur in Germany or the UK which are much less dispersed geographically.

LH will need to chose where it stands and it better do so quick because it risks remaining stuck with a short-haul loss making operation whilst all its competitors fly long-haul at a profit without the need to sustain a short-haul network since it has been either outsourced or downsized to fit demand.

If you look at its competitors, BA has almost shed out its domestic operation and operates mostly from London to Scotland (which is the only trip where the distance makes air travel important enough) , KL makes extensive use of regional jets to key markets like the UK and AF has ordered 100-seat CRJs to downsize its seat offer.


User currently offlinehaddock0815 From Germany, joined Jan 2007, 43 posts, RR: 0
Reply 18, posted (3 years 4 months 1 week 6 days 19 hours ago) and read 12041 times:

Quoting CaptainCrackers (Reply 7):
I think FR's success proves that a lot of people are willing to forego lounge access, assigned seating, and the need to drive cars big enough that they cost €0.80 per km to operate for cheaper airline fares. Your personal mileage may vary, as they say.

I think that this proves that a lot of people simply don´t think about the additional costs. They just see the low price for the flight itself.


User currently offlineSemaex From Germany, joined Nov 2009, 823 posts, RR: 2
Reply 19, posted (3 years 4 months 1 week 6 days 18 hours ago) and read 11889 times:

First, why do I keep flying LH on my most frequent route FRA-VIE-FRA? With AB/HG the round trip starts at around 60€; with LH/OS around 100€.
Simple answer: convenience. LH has a great mobile and online check-in center which provides you with all kinds of useful service regarding gate changes, seat row and number selection, aircraft type. It usually saves me half an hour of checking in, luggage dropping, boarding etc. Flying LH (on that particular route) is easier than kanooing.

Quoting avek00 (Reply 11):
It's only a matter of time (3-5 years, tops -- maybe less time than that if fuel costs skyrocket again) before the European legacies copy the short/medium-haul practices of legacy airlines that operate in the world's most advanced air market -- the United States.

I am not sure what you mean by "most advanced". If that title is earned through customer satisfaction, low price, convenient and easy transiting, exceptional service levels and so on and so forth, then I tend to disagree.
And I go as far as saying that this model of air travel - as much as it is useful for the american public - it is not what european carriers aim for nor what european passenger will want.
I strongly believe that you cannot take one aspect of a culture, export it to a different culture and expect similarly positive outcomes. And US-american and european culture ARE different.

Quoting just7four7 (Reply 12):
Sooner or later the last few Euro legacy carriers such as LH will face euro network extinction, and the simple reason is the higher cost structure, no way around it.

I don't think so, because there really is no good alternative. LCC's usually fly to secundary markets because they don't want to affort high primary-airport prices, but that makes them vulnerable to business traffic. Non-Legacy carriers like AB might take a share of LH, but then nothing is really going to make a difference network- or cost-structure-wise.
Oh right and the (high-speed-) train connections are fantastic throughout Europe, but let me stick to my example of FRA-VIE: InterCityExpress one way 120€+++

Quoting MaverickM11 (Reply 14):
Quoting PanHAM (Reply 10):
the US carriers would be well advised to copy the European majors

Copy what? Losing more money domestically/regionally? EU/US carriers can only do so much on the cost side--the missing piece on the EU side is additional revenue opportunities, ie fees.

I think (I assume) Maverick was referring to quality levels or anything else than fares.

Quoting just7four7 (Reply 12):
The various shares and ownerships into smaller local euro carriers (AUA, Brussels, BMI), does not render similar efficiencies (except Swiss).

LH turned LX deep black. They instated the same people for the job at OS, and while the AUA group is still in the reds, a look over the numbers since the LH-takeover give very positive signals. The red numbers are getting smaller quarterly. If the same applies for SN I do not know. What I do know is that LH does not hold BD for it to be profitable, we can all speculate why that is...



// You know you're an aviation enthusiast when you look at your neighbour's cars and think about fleet commonality.
User currently offlinePanHAM From Germany, joined May 2005, 9524 posts, RR: 31
Reply 20, posted (3 years 4 months 1 week 6 days 18 hours ago) and read 11678 times:

Quoting MaverickM11 (Reply 14):
Copy what? Losing more money domestically/regionally?

well, I am sure that we do not want to learn how to shed debt every couple of years by going through chapter 11. LH has a lot more substance than any of the US carriers, except probably Sotuhwest.

Quoting Flighty (Reply 15):
Europe is still in the early / middle stages of LCC revolution. LH has more of a "captive" home market than for example US legacies. But it still won't compete so well within intra-EU services. They have a nice product which assumes a certain ability to set prices.

you totally ignore the fact that Europe is a single market, LCCs can fly from anywhere in Europe to anywhere in Europe. Since the single market, there are no"captive" hme markets any longer. haven't been befoe either since carriers could fly passengers through their hubs. LH does that very well BTW and offers better connections to italians through MUC than they have threugh their airports. Also does Lh have a strong competitor with AB not only in Germany.

.

Quoting Semaex (Reply 19):
imple answer: convenience. LH has a great mobile and online check-in center which provides you with all kinds of useful service regarding gate changes, seat row and number selection, aircraft type. It usually saves me half an hour of checking in, luggage dropping, boarding etc. Flying LH (on that particular route) is easier than kanooing.

one of the strongst arguments against LCCs. Instead of having to wait in endless lines 2 or more hours before flight departure, I print my LH boarding pass within 24 hrs before departure, park my car in t1 40 minutes before departure, use the business lane for security (advantage of status member) even when flying Y, and reach the gate well in time for boarding. No need to stop anywhere else besides security. Even using the kiosk in the terminal for printing the boarding pass just adds 2 minutes to time spent at airport.

As long as LCCs do not offer anything near to that, they will have to forget about the majority of biz travellers.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlinegoblin211 From United States of America, joined Jun 2010, 1209 posts, RR: 0
Reply 21, posted (3 years 4 months 1 week 6 days 18 hours ago) and read 11549 times:

I've never flown LH but I would imagine Germany denying EK might be a problem. See, if you deny airlines the market, you're consequently, raising the prices of those flights. If the price is raised pax will go on another airline. everyone on here already knows this, but we sometimes forget that it's the little things that can blow a huge hole in chances of profitability on certain routes. Therefore, if LH bumps up their competition with other airlines on certain routes, they'll be able to lower prices and steal some customers from the other airlines. Airlines are a business so they should do business things. IMHO


From the airport with love
User currently offlinesomething From United Kingdom, joined May 2011, 1633 posts, RR: 21
Reply 22, posted (3 years 4 months 1 week 6 days 18 hours ago) and read 11378 times:

I actually see the same thing happening in the future. Continental used to pride themselves in their quality and high standards. Now, with no complimentary meals even on their 9+hrs EWR-HNL flights, first checked baggage fee etc. they've officially downgrades themselves on one level with NK in my eyes and give people even more reason to fly with WN or B6. And if it weren't for their larger network, they couldn't exist the way they do now as it is.

And I expect similar things to happen with LH. It's an unpopular move, but one airline will follow the next and soon it's become widely accepted industry standard.

Beneficiary of this will probably be Air Berlin. They're still the underdog in Germany and could probably gain a bunch of customer's favor simply by being different and still offering free checked baggage and complimentary meals.

In the longrun, AB and LH will probably look more and more like CO and B6.



..sick of it. -K. Pilkington.
User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 23, posted (3 years 4 months 1 week 6 days 18 hours ago) and read 11322 times:

Quoting PanHAM (Reply 6):
well, I forgot to mention that they fly you to an airport in a populated area, save you from driving 100 or 200 km and much more. As a status customer I can even use the lounge when travelling on a %u20AC 99 ticket. It is all a matter of when you purchase the ticket. Compare the same day price FRA-LHR vs HHN-STN with the same day price of FR and then add to the FR price the cost of driving to and from a remote airport (in my case that would be 250 km @ %u20AC 0,80/km, costs for baggage, and the cost for hotel, because I can make a same day return to LHR but need 2 days in case of STN. Even without fully valuing my time, LH will be cheaper in C than FR in FR class. I do not even argue of having to stand in line at FR check in whereas I do not see a line I have to wait in when flying LH.

Would respectfully have to then also say I forgot to mention that Ryanair fly me, and very many others, where I want to go, so your usual argument of a 'populated area' falls flat, and always did......aren't you somehow ignoring not every passenger needs/wants to go to where you think they should go? As you later say, it comes down to LH suiting where you want to go.....am not suggesting you fly to STN, but what I am stating is that your argument of being definitively correct by ignoring the requirements of others is nonsense. In fact, the very fact of having to go to LHR is really of no relevance.....if, for example, you had to go to say Huntingdon, would you still go to LHR because you would find a closer but 'remote' airport not suitable? See, it all boils down to what a pax requires at a given time but yet you ignore this fact. Indeed, it shows when you refer to it as FR class......as much as use of lounges is an ego boost. Not everyone needs such by any means and if so, fine but if not they are of no use. I don't need to be seen in a lounge. As I previously said, if LH fits your requirments feel entirely free to fly them and pay the prices, but don't sit there and tell me and others what we should/should not do, or what we require.

Quoting MaverickM11 (Reply 14):
Copy what? Losing more money domestically/regionally? EU/US carriers can only do so much on the cost side--the missing piece on the EU side is additional revenue opportunities, ie fees.

Now correct me if I'm wrong, but as the "missing piece on the EU side" you seem to be suggesting that somehow these 'nickle and dime' fees are a genius move by US carriers? Please note, I'm not disagreeing with the fees at all, but just getting right in my head if that's what your saying.

Quoting just7four7 (Reply 12):
Sooner or later the last few Euro legacy carriers such as LH will face euro network extinction

Sorry, but I'm not quite getting you there at all. Why should Euro carries be any different from US, or any other large region? Are you saying the same thing will equally apply?

Quoting avek00 (Reply 11):
that operate in the world's most advanced air market -- the United States

In what respect do you somehow see the US as the world's most advanced market? Definitely curious because it certainly isn't on quality so I find it hard to hear you criticise the fee's issue.

Quoting Flighty (Reply 15):
Europe is still in the early / middle stages of LCC revolution. LH has more of a "captive" home market than for example US legacies

How on earth are you arriving at that and, indeed, why should LH have a more captive market than any US lagacy? On that very point, EU carriers are not known to chase chase mythical 'market share' and repeatedly lose money doing it....so, on the contrary, US legacies should certainly have a very captive market.

Quoting PanHAM (Reply 10):
Well, the high fares of LH are aimed at the business traveller who pay these fares when travelling on short notice. From where i live I could not make a trip on an LCC to any place in Europe and be back in the evening. From FRA I can reach all of Europe on a morning flight and sleep at home. hat saves at least € 100-150 depending what your destination is in hotel accomodation and € 0,80 a km includes the cost of ownership, which many people simply forget. It is more than just the petrol. Most important is, the average executive travelling costs the company about € 1000,00 per day, some less, many more.

Unless they live in places like CGN or BER the companies lose money on cheap LCC fares. Very simple math.

No, I don't think that it's as simple as you are trying so hard to make it out to be. Firstly, I'm not trying to be either rude, personal or awkward but I strongly disagree with the way you are projecting things as truths. I can understand what you're trying to say, agree with some but unfortunately also feel that you are injecting many aspects of personal preference into definitive fact such as what you could theoretically do and I question a lot of your figures. For example, what statistics are you using to arrive at 'executives' travelling cost their company about €1000.00 per day......indeed, what are you even defining as an 'executive'? Such anayysis plays a large role in my daily employment and I can assuredly tell you that, contrary to the fashionable a.net myth, the vast majority of business travellers do not travel on same day fares, nor do they require infinite flexibility. A great majority travel in Y, and indeed on the very carriers you clearly disdain as inferior...because, as I keep pointing out, not everyone needs to go to where you think they need to go. Similarily, if you can travel to anywhere in Europe and be back the same evening, you are either spending very little time at your destination (which wouldn't really classify as any major, critical business trip) or you're only talking about major cities. Again, your statement that unless they live in such as CGN/BER companies lose money using LCC's is completely without any substance or foundation. So no, many peoples choices or needs do not equate to yours, so this it is not as simple as you would try to make out at all.


User currently offlineSemaex From Germany, joined Nov 2009, 823 posts, RR: 2
Reply 24, posted (3 years 4 months 1 week 6 days 18 hours ago) and read 11297 times:

Quoting goblin211 (Reply 21):

I think you're comparing apples with bananas here.

The OP clearly states that the problem-child for LH is the European market i.e. short- to medium-haul. EK plays no role whatsoever in this context.
In fact, as stated, the big money-maker for LH is long-haul, where EK is of course a big competition. However, LH's long-haul pricing is very competitive, and believe it or not: often cheaper than EK! Besides, the big trunk routes for LH is the West-haul market, where they don't have to fear competition of Gulf carriers from a European passenger's point of view, thanks to geography.



// You know you're an aviation enthusiast when you look at your neighbour's cars and think about fleet commonality.
25 avek00 : This is not at all true. Even with the "single" air market, consumer preferences -- at least, with respect to European legacy airlines -- continue to
26 vinniewinnie : By the same token all American majors should have stopped flying domestically long ago...
27 airbazar : No it doesn't. The LCC in Europe are creating their own customers which didn't exist before. The proof is that both LCC and legacy carriers are seein
28 DHR : Its only a matter of time that LH will turn to Germanwings to do their shorthaul flights and I've heard that this is what Franz has been looking at fo
29 Post contains images fxramper : A bit of an extreme thought on my part, but would LH ever go solely international a la Pan Am?
30 Post contains images Semaex : I'd imagine some instances along the lines of politicians, families of ground staff and for sure LH-mainline pilots and flight attendands might not l
31 Post contains images loveofflying : Germans just love LH. One thing that would make LH more competitive for me is if they offered reasonable one-way fared. Frequently I book round trip b
32 MaverickM11 : Yes. Or they can cut costs. You may not want to learn, but you'll have to do something, especially since the US carriers have a good two decades head
33 Post contains links Semaex : I guess booking one-way Canada-Germany is just not what airlines think is a viable product. Here's a Lufthansa press release on one-way fares (dated
34 Post contains images something : Well, the competition is strong and the German taxes notorious. Companies aren't as willing anymore to put their employees on airplanes and have them
35 Semaex : And I think this topic is the exact thing which draws a line between US and European airlines. I've never been to the US, so please take be aware tha
36 SR4ever : LH would just shoot itself in the foot if it were to ape U2 or FR on its European network. FRA, MUC and HAM are key hubs in short+mediumhaul traffic,
37 Post contains images Semaex : I'm don't think everybody knows what your graph is trying to tell, for lack of language skills. Please explain
38 Post contains links something : Oh, my bad. I figured the graphic would be self explanatory. It's from a recent EuroStats study that believes Germany, currently the biggest country i
39 Flighty : My theory goes that Germans speak German. Furthermore, LH has a long established marketing base in a place called Germany. Coincidentally, LH was the
40 Viscount724 : I disagree. EK wants access to more cities in Germany than the 4 they're now permitted to serve. Whenever they obtain more liberal access to such mar
41 loveofflying : No, no - I meant intra-European one-ways... The economics of USA/CAN - EUR are such that round-trip fares are OK. However, Europe is now like one cou
42 Talaier : Agree. Either that or they will create a new brand (LH Express or something along those lines) with a lower cost structure. It's just not feasable to
43 airbazar : Who cares about the size. They are the biggest economy in Europe, arguably strongest economy in the World, the ones with greater purchasing power, an
44 Amsterdam : Lufthansa is one the strongest airlines in the world. The Germans are business wise one of the smartest people in the world. They´ll sort it out.
45 garpd : When I can get to my family in Germany for £150 all in return with FR, I begrudge paying £400 for just the flights with LH. I DO take additional co
46 abibus : Every time i Look for flights lh cost more than all others i fly in august fra lis with tap for 168 euro lh price was 408 euro than i fly in the same
47 r2rho : I think this comment from LH's CEO is being blown a bit out of proportion. Yes, LH is suffering on its intra-EU network, but it is still in an enviabl
48 Rara : They can't, they need the feeders. While FRA and MUC are OKish in terms of O&D, Germany is very decentralized, meaning you will need connecting f
49 spottingpete93 : Couldn't agree more!! I flew LHR-FRA-INN last year for more than 4 times what I could have done LGW-INN direct on EZY. Would have gone EZY if it hadn
50 Semaex : Wow that's what I call a costly fare. Strange really, because the intro-EU trips i make with LH are seldom more expensive than 150€. Maybe The UK (
51 ual777uk : Are the problems that LH have also issues that BA and AF/KLM also face with loss making European routes. I know that BA for years was losing money in
52 mikey72 : Ryanair and Easyjet were a very effective catalyst for change in the UK. BA short-haul was a huge loss-maker but was gradually brought back into the
53 AirNZ : Sorry, but it 'proves' absolutely nothing of the sort! On the other hand, what you mean is it shows that passengers are not the stupid morons they ar
54 MaverickM11 : Ah yes, the "consumer protection" which is really just a guise to kill EU carriers, restrict competition from certain undesirable carriers, and gener
55 Post contains images commavia : Well then Lufthansa and other European legacies better hold on, because as I'm sure you know - all that stuff is coming to an LCC near you someday ve
56 CXA330300 : The Lufthansa network definitely has a lot of flights that don't seem to be doing very well...I imagine that a lot of those flights are some of the lo
57 Semaex : FRA has a perfect (inter)national railway terminal, but MUC?? You've clearly not tried to reach MUC by train, and there are no plans to improve the c
58 airbazar : So how do you explain that European legacy carriers seem to be doing so much better then their American counterparts?
59 MaverickM11 : Their exposure to this brutally competitive segment of the market, ie domestic/regional, is much smaller as a percentage of their total capacity than
60 CRJ900 : I suggest LH install the new super slimline seat in the CRJ900s so they can take 90 pax while keeping the galleys. Four more seats gives better CASM,
61 Post contains images commavia : Thus why many European airlines (and their governments) are actively keeping certain competitors - particularly from the Mid East - from growing in t
62 RVV2011 : I prefer to fly with an airline that is financially strong, and yes I'd rather pay a little extra if that's what it takes. As an avid fan of Lufthansa
63 AirNZ : Ah, very difficult to debate properbly when the old convenient excuse (predominently from an American) of conspiracy and unfait competition is rolled
64 AirbusA6 : Have LH been artifically protected at FRA due to the lack of slots there for LCCs, and lack of alternative airport for LCCs to use - and no I don't co
65 commavia : Huh? I have no idea what the above is talking about, but the bottom line is this: Europe's air carriers are becoming less and less competitive in an
66 MaverickM11 : They don't have to do anything; they can watch LCCs take over their market and not react, but that is an untenable position in the long run. They can
67 Cassi : This is not only LH's problem. It is highly likely that *all* of the major legacy carriers (BA, AF, LH, SK, AZ) are losing money on their European ope
68 MaverickM11 : The EK model doesn't work without implicit, if not explicit, government support or with organized labor
69 par13del : Which is why the service standards in the US has fallen, save money on free food, blankets, lounges, pillows, snack packs, souvineers, etc. etc. etc.
70 Post contains images AirbusA6 : As all European airline crew will speak English, it's easy for us Brits. Got an early AZ flight tomorrow morning, so must go to bed
71 AirNZ : I rarely disagree with your usually excellent posts, but certainly must do on this occasion, because it has lost me almost as much as the one I respo
72 Post contains images iainbhx : Of all my 100 or so flights over the last three years leaving the UK, only two have been from Heathrow. All the others have been from my local airpor
73 par13del : The US domestic market is captive for them since they do not allow cabotage, but the thread is about an individual EU carrier LH, some are saying tha
74 par13del : Wanted to also comment on this one, US carriers strength is their domestic market hence them making so much money from fees, based on their internati
75 bestwestern : Is this Lufthansa or Lufthansa Group that is losing money in Europe. we all know OS and BD short haul are basket cases.
76 Post contains links VV701 : My assessment, right or wrong (because my knowledge of US Civil Aviation Policy is probably as limited as most Americans' knowledge of British and Eu
77 Post contains links par13del : On another note, congratulations to LH on their MIA ops with the A380. Video up on Miami Herald web site among others, will also check the airport web
78 airbazar : Fair enough. Then how is "consumer protection" as you put it, going to kill the EU airline industry? All airlines must play by the same rules, be it
79 avek00 : This is not at all true.
80 MaverickM11 : It imposes costs at every turn that make much less viable; it's fairly clear that EU governments see the industry as both a pinata as well as an enem
81 adambrau : Lufthansa will always benefit from it Trans Atlantic anti-trust immunity where many American and Canadain passengers transfer onto to LH flights at FR
82 AirNZ : Sorry, but it's more 'fairly clear' that your views on this entire matter are only your opinion and nothing more, because you haven't shown one fact
83 commavia : It's already been covered - in this thread, and indeed, in others. The European pseudo-scientific, anti-aviation environmental tax is going to hit Eu
84 airbazar : I disagree. The only thing that will kill the European airlines is if people stop flying. When I start seeing people get back into their cars and awa
85 commavia : ... which they will as the tax and regulation burden increases further. And, of course, that should be expected - many European "green" advocates hav
86 Quokka : While there is some validity in the argument that an airline like LH may face a greater burden when additional taxes are imposed, some taxes are levi
87 Post contains images luckyone : The Big 3 US carriers all provide complimentary meals on long haul/transoceanic flights. The quality, like any airline meal, is entirely debatable, b
88 MaverickM11 : What do you think happens when the tax increases from 0 to 20GBP, or 80? Of course, but again EU carriers bare a lot more of the consequences than, s
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