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LUFTHANSA, Is It Ready For New Low Cost Carriers?  
User currently offlineKeesje From , joined Dec 1969, posts, RR:
Posted (12 years 2 months 1 week 1 day 17 hours ago) and read 4387 times:

After BA years ago and KLM in recent years the german market seems rapidly opening up for new low cost carriers.

I know a few years ago lufthansa had 80 % of the domestic market, that is before they took over Eurowings. I was surpriced then that the government accepted this over-dominant position.

Many flag carriers used to believe low cost carriers wouldn't hurt them, because business travellers would go for frequency, service, FF points, etc.

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Since they've counted the number of Samsonites and Ties at the Easyjet, Go and Buzz check-in they've changed their minds ...

Now we see low cost carriers entering the german market. Is Lufthansa ready for them ? How will they handle this ?


24 replies: All unread, jump to last
 
User currently offlineAirblue From San Marino, joined May 2001, 1825 posts, RR: 11
Reply 1, posted (12 years 2 months 1 week 1 day 17 hours ago) and read 4349 times:

I think they are ready.

The new low-cost carrier Germanwings is partially owned by LH.
If this new airlines will run, they could also controll the German low-cost market.


User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 2, posted (12 years 2 months 1 week 1 day 17 hours ago) and read 4340 times:

What an interesting question, I look forward to reading the replies!

I guess it all depends on whether the German consumer is different to the British or Irish consumer, the latter being more price-sensitive and less quality-sensitive, at least in the presence of LCCs. In Britain, people generally like to obtain bargain fares, and are willing to give up most elements of inflight service in order to secure the cheapest prices.

I'm not German, and I've never lived In Germany, so it's difficult for me to write intelligently about whether the LCCs are a significant threat to LH, as they are to British and Irish full-service carriers (at least on short-haul Euro routes).

It's true that there certainly seems to be a lot of 'suits' checking-in, especially on the early-morning flights, and especially on airlines which serve main airports such as buzz and Go.

My own opinion is that Ryanair isn't really competing directly with LH, but rather widening the total number of people who fly....I can't say I would like to fly to HHN instead of FRA, especially on a day-trip.

I don't know about the German LCCs, but I would say they could pose a greater problem for LH, especially as they seem to offer above-average inflight service, serve main airports, are punctual etc.

Rgds!


User currently offlineTouchdown99 From , joined Dec 1969, posts, RR:
Reply 3, posted (12 years 2 months 1 week 1 day 15 hours ago) and read 4310 times:

Germanwings serves, among others, the following destinations from CGN: MXP, BCN, MAD, VIE, CDG, LON, ZRH

In reaction, Lufthansa Cityline has axed the following routes from CGN: MXP, MAD, BCN, VIE and reduced services to CDG, LON, ZRH (well VIE is more of a reduction as OS will keep two flights).

Just to give you an idea.

I think airlines like Go, Buzz or Germanwings are targeting the "smart business traveller" to a bigger extent than Ryanair.


User currently offlineAirsicknessbag From Germany, joined Aug 2000, 4723 posts, RR: 33
Reply 4, posted (12 years 2 months 1 week 1 day 15 hours ago) and read 4296 times:

LH already reacted with two moves:

- introducing a new fare structure for domestic flights, starting at 88 EUR rtn incl tax.
- founding germanwings which is owned 100% by eurowings which is 24.9% (planned: 49%) owned by LH.

Furthermore, I agree that the low cost carriers serve a whole different clientele.

Another point about competition for LH, especially on domestic routes: German Rail. Other than the mother countries of low cost airlines (US, UK, Ireland), Germany has a fast, efficient rail system with competetive prices.
This, and another aspect on which I´m going to comment in a moment, make the German market completely different from the UK and Irish ones.
That other aspect is geographic location. Great Britain and Ireland are both, surprisingly, islands. A German can hop into his car and drive to Paris, Milan or Vienna, a Briton or Irishman can´t. And if the German fills his car with a family of four, the cost is unbeatable. After all, low cost carriers are not as low cost as they want to make us believe.

All in all, from my point of view LH is very much prepared for the low cost carriers´ attacks. Keep in mind they survived numerous attemps (German Wings, Aero Lloyd, eurowings/Air France, Deutsche BA) in the late 80s/early 90s. 10, 15 years and a privatisation later, LH have sorted out their economic troubles and especially streamlined their operation. Compared to 10, 15 years ago, they´re lean and mean  Big grin

Daniel Smile


User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 5, posted (12 years 2 months 1 week 1 day 14 hours ago) and read 4277 times:

In my opinion Germany hasn't had the taste of a good low cost yet.

Ryanair flying from Hahn (Hahn ?) a few times a day, with bad service to place you don't want to go to, is mainly for student groups, shopping days and fun flights.

Germanwings is LH controlled and seems focused on markets LH doesn't want to serve themselves (low yield ?).

I think it could be time now for a non LH related LCC doing 5-6 times a day between FRA, HAM, MUC, Berlin and DUS.

Easy booking tools, clean aircraft, leather seats, a big German flag on the outside, beautiful young german fa's, german bradtwurst & beer for a acceptable price, live TV news (like Jetblue) ?

That could be a moment of truth, Lufthansa hasn't experienced so far ...


User currently offlineTouchdown99 From , joined Dec 1969, posts, RR:
Reply 6, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4248 times:

DUS and FRA are slot-restricted airports, hampering the start of a LCC from there - and there are no suitable secondary airports somewhere near (the closest to FRa is HHN - 124km), the closest to DUS are CGN or DTM.

I disagree that LCCs and LH serve "totally" different markets. If one flies at short notice, 4U or FR tickets can cost as much as 600 € return are they are certainly not targeting students or leisure travellers with such fares. I once read an article about the percentage of business travellers on board Buzz and Go and the number (cannot recall) was surprisingly high. Certainly, LCCs generate additional demand, but they are also of importance to smart business travellers mainly from cost-conscious smaller and mid-sized businesses. Australian LCC Virgun Blue says that this business clientele is an important group of passengers.



User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 7, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4241 times:

Is it realistic to divide low cost carriers in two groups ?

A. prices fighters : flying to secondary airports, doing low frequency's, cutting back on all service (Ryanair)

B. network challengers : flying to destination also used by business travellers (GTW, CDG, AMS), increasing frequency's, offering acceptable service, at a price (Easyjet, Go, Buzz)

? ? ?

Look at the breakfast I can order at Buzz (£6.50) while booking a flight, doesn't look too bad IMO ;

http://www.cafe-buzz.com/

Ryanair and Easyjet seem to have very different strategy's, what do you think ?


User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 8, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4236 times:

Hi

Again, I will leave the German stuff to the people who know their country and airlines best...Germans.

I would just like to add that perhaps BA is an example of what could (and has) happened when LCCs emerge as a dangerous threat to an established carrier's business.

Restrictions have been removed on many of BA's Euro routes, and prices are now lower than ever.

BA makes a point of advertising its benefits over LCCs;

-Major airports served

-High frequency of departures

-Interlining

-Complimentary beverage and food

-FFP on all flights

-Clean, modern aircraft

-Flexible ticket options

-Peace of mind that comes when flying BA...if something goes wrong, they won't run away, or tell you to get lost.

This I guess could be applied to Lufthansa, and other European full-service airlines faced with competition from LCCs. Indeed, I realise LH is beginning to offer some more reasonable prices on flights from the UK to Germany. Looks like KLM and SAS are also moving in this direction, along with other British carriers.

Really interesting thread!


User currently offlineTouchdown99 From , joined Dec 1969, posts, RR:
Reply 9, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4237 times:

Hm, not too bad, but for 6.50 GBP - that is 10 EUR for all those miniature rolls, danishs, pancakes....... :-(

I remember a Ryanair manager once joking that Ryanair was selling the most expensive sandwiches in Europe....... Not much different at other LCCs, although I seem to remember that Easyjet is not as expensive as, say, Ryanair.


User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 10, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4230 times:

Keesje, a good book that would answer that question and more is 'Cleared for take-off' by Thomas Lawton.

Yes, there are those LCCs which are competing mainly on price, and those who are competing more on market-share....the difference seems to be that the Ryanair model (although not to many people's taste) is more financially robust and brings greater returns than the other models (Buzz, Go, Easyjet), although the latter 2 have also generated good profits recently.

Rgds


User currently offlineAndreas From Germany, joined Oct 2001, 6104 posts, RR: 31
Reply 11, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4233 times:

...you read too many bad books and watch too many very bad British soaps on Germany, anyway, I nearly wet myself when reading your last posting! You did forget: Nude news, please, presented live on board, using that Bratwurst to...well never mind!!

Now back to serious: Basically, Capt. Picard and Airsicknessbag have it right, I believe. LH is already in the process of reacting to the "LCC Threat": New lower fare structure, reduced turnaround times, reduced seat pitch in economy (they are close to unbearable now, even on a short flight like FRA-TXL). Additionally they have all the advantages given, well, naturally to them, like airports in big cities and not somewhere in the backwoods, which makes business travelling, at least on short trips, unfeasible (if I have apointment at 11 a.m. in Hamburg, I certainly don't want to get out ouf bed at 4 a.m.t o get to HHN, but at 8 a.m. to reach an LH flight in FRA).
But I do believe, that German customers ARE price-sensitive, and if we don't see an improvement in economy or do get further tax bullying form the government, this trend will increase drastically. I have always been an LH customer, and probably will be one for many years to come, but on my private trips, I increasingly use other non-Star Alliance carriers such as Germania or Deutsche BA. And I do know a few collegues (Senator card holders, all of them, just like myself) acting likewise! This should give you an idea, that the threat to LH is real, but in the end, it'll be LH's management, that will keep them their dominating position on domestic routes, but for much better airfares than a few years ago.

Regards

Andreas



I know it's only VfB but I like it!
User currently offlineB737-700 From , joined Dec 1969, posts, RR:
Reply 12, posted (12 years 2 months 1 week 1 day 13 hours ago) and read 4221 times:


Keesje, we do have DBA doing the domestic LC flights you mentioned. At least some of them. STR-HAM and STR-DUS is missing imho.


User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 13, posted (12 years 2 months 1 week 1 day 12 hours ago) and read 4201 times:

Andreas  Big grin
Germany consumes the largest amount of beer per capita than any other nation. Czechoslovakia is
2nd and Great Britain ranks 9th. The United States ranks a disappointing 11th.
http://www.brewnotbombs.org/stats.html
Ich hatte heut' ein 7-Gange Menu : Ne' Bratwurst und 'n Sixpack Bier!
lol

Enough ;

Capt Picard I think Easyjet/Go is starting to fill in the BA's strong holds more and more :
-Major airports served
(GTW, SPL, FCO, CPH, Milaan)

-High frequency of departures
(AMS-LND 10 times daily now)

-Interlining
(less relevant for this market)

-Complimentary beverage and food
(good quality for sale)

-FFP on all flights
(irrelevant for opportunistic flyers)

-Clean, modern aircraft
(see today Easyjet order)

-Flexible ticket options
(less rel. on European day trips)

-Peace of mind that comes when flying BA...if something goes wrong, they won't run away, or tell you to get lost.
(I was re booked on a later flight without a problem recently, when I was too late)

I find it amazing how distant & ignoring flag carriers remain until it hits them deep in the wallet. I found booking a LCC ten times easier & faster then LH/BA flying to London, apart from the low price ...

Don't forget LCC don't advertise "by the rules". They could picture LH as a big monopolistic Kremlin trying to stop them honest small LCC just like Southwest did in the seventies.

regards
keesje


User currently offlineGodbless From Sweden, joined Apr 2000, 2753 posts, RR: 16
Reply 14, posted (12 years 2 months 1 week 1 day 12 hours ago) and read 4197 times:

Is there any information on DBA and if they will increase their German network, since they have experienced an increase in passenger numbers after going "lowcost"?

I would love to see them add CGN-STR as that would be a route I would then fly quite often...

Max


User currently offlineSabena332 From , joined Dec 1969, posts, RR:
Reply 15, posted (12 years 2 months 1 week 1 day 11 hours ago) and read 4171 times:

I would love to see them add CGN-STR as that would be a route I would then fly quite often...

Seems to me that Max`s new girlfriend lives in STR Big grin

Patrick


User currently offlineAirsicknessbag From Germany, joined Aug 2000, 4723 posts, RR: 33
Reply 16, posted (12 years 2 months 1 week 1 day 10 hours ago) and read 4153 times:

... or he wants to see Ndebele more often  Smile/happy/getting dizzy

The main reason why DI never performed the way they (and BA) wanted: they never served FRA.

Daniel Smile


User currently offlineVfw614 From Germany, joined Dec 2001, 4060 posts, RR: 5
Reply 17, posted (12 years 2 months 1 week 1 day 10 hours ago) and read 4141 times:

Since its re-launch in April,. DBA load factor is only up to 65% which is much too little to allow an effective low-cost-operation. Easyjet's CEO Webster recently quite correctly pointed out that DBA is selling tickets for low cost, but is not producing them for low cost.

User currently offlineSQ325 From Germany, joined Jul 2001, 1455 posts, RR: 7
Reply 18, posted (12 years 2 months 1 week 1 day 8 hours ago) and read 4085 times:

LCC and a load factor of 65% thats bad, really bad!
DBA wont survive on the german market they still can't compete with LH on the innergerman market.


User currently offlineB737-700 From , joined Dec 1969, posts, RR:
Reply 19, posted (12 years 2 months 1 week 1 day 7 hours ago) and read 4079 times:

Wow, 65% sounds really pretty bad for them.
What's the reason ? They have good routes and fly often - maybe too often ?

But with Lufthansas 88€ offers it's probably going to be even harder for them I guess


User currently offlineYyz717 From Canada, joined Sep 2001, 16365 posts, RR: 56
Reply 20, posted (12 years 2 months 1 week 1 day 7 hours ago) and read 4080 times:

Ryanair flying from Hahn (Hahn ?) a few times a day, with bad service to place you don't want to go to, is mainly for student groups, shopping days and fun flights.

Ryanair did not become the Euro-colossus by flying where no one wanted to fly.

Unless LH's operating costs can be lowered to the range of FR, FR (and their ilk) will continue to make inroads to the flag carriers markets. Since LH's operating costs are clearly much higher than Ryanair, I would say that they are not ready.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 21, posted (12 years 2 months 1 week 1 day 5 hours ago) and read 4039 times:

Yyz,

I do agree with your first statement. Although there are plenty of people who don't really like the way Ryanair operates, and/or the type of service offered, they sure do still manage to put plenty of people on their jets, and aviation analysts generally believe the Ryanair 'model' to be very strong and robust....although perhaps the service could improve a little (I believe Ryanair are beginning to pay attention to this).

However, I just don't think Lufthansa and Ryanair are really in the same league...even though FR makes a big point of being 'cheaper' (or whatever) than LH, I cannot really imagine the typical LH flyer opting to fly with FR, unless they have plenty of time, and the price differential is huge (this might happen more often than not).

As I said earlier, FR doesn't so much compete head-on with the full-service airlines, as provide a cheap mode of travel to many people who might otherwise spend their money on a shopping trip, a family meal to a good restaurant etc. They are more interested in price-competitiveness than trying to steal LH's market.

This doesn't of course mean that those travellers who usually fly on LH, KL, BA and so on totally reject the idea of flying with FR (because obviously, this isn't the case), but I think if you fly on an FR flight, you notice right away that probably the majority of pax are indeed students, youung couples, very old couples (all basically leisure flyers) with a few businessmen (looking very nervous  Smile/happy/getting dizzy ) here and there.

I actually had quite an interesting conversation with a German guy (who writes on these forums) a few days ago....he added that there seems to be a tendency/preference amongst Germans to fly, if possible, with a German airline. I guess it's 'peace of mind'. Americans feel safer flying on American carriers, Brits on British carriers (well, I'm not sure Brits really care which airline they fly, but anyway...)

Rgds


User currently offlinePatroni From Luxembourg, joined Aug 1999, 1403 posts, RR: 14
Reply 22, posted (12 years 2 months 1 week 1 day 4 hours ago) and read 4014 times:

Well, here we are again, comparing LH (or BA, KL, etc...) to the LCC.

It is not necessarily true that one has to get out of bed at 4am to get to HHN for a flight to somewhere while he could have the same at 8am on LH ex FRA. This always depends where people are living - and not everyone lives in or near FRA. For me personally, HHN is much closer than FRA, so LH would be the worse option for me, timewise at least.

I happened to fly twice with Ryanair in March, HHN-BOH and HHN-BGY. Both flights were ok, no special remarks about the service, but they were all nearly full! On the parking lot in HHN you could see cars from Cologne, Karlsruhe, Stuttgart, Saarbrücken, Trier, some even from France. So it seems that Ryanair's strategy can't be THAT wrong, can it?

On 27th October I will fly from Cologne to Stansted on the first day of German Wings (2) operation - I love the airline code "4U" btw.... I will be very curious to see their product to compare to Ryanair as so far the only other LCC I ever flew with was Valujet in the mid 1990s.

When I am in England, I might go for a day to Zürich on Easyjet. 60GBP incl taxes etc from Luton. Don't think that BA or LX can compete with this.

So basically I think that LH is well prepared, but there will be many surprises in the air for them.

Cheers,

Tom



User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 23, posted (12 years 2 months 1 week 11 hours ago) and read 3986 times:

After gathering info from other threads ;

is Germanwings (->Eurowings->Lufthansa) an opportunistic (surplus a319's) way of showing :"yes we are in the LCC playing field and do offer cheap tickets"

or is it a LH way of defending itself in key markets

or is a strategic LH entry into this new market by a new cost driven LH independent ?

I browsed through the http://www3.germanwings.com/index_de.html site and haven't seen anything new, exiting, surpricing or inviting yet. Who do you think ?


User currently offlineAndreas From Germany, joined Oct 2001, 6104 posts, RR: 31
Reply 24, posted (12 years 2 months 6 days 16 hours ago) and read 3958 times:

Patroni: It is not necessarily true that one has to get out of bed at 4am to get to HHN for a flight to somewhere while he could have the same at 8am on LH ex FRA. This always depends where people are living - and not everyone lives in or near FRA. For me personally, HHN is much closer than FRA, so LH would be the worse option for me, timewise at least.

No, certainly not, but maybe you'll accept the fact that a lot more business travellers live in FRA or close (such as myself) than close to HHN; otherwise LH would long have established flights from HHN to TXL, MUC etc.

Picard:I actually had quite an interesting conversation with a German guy (who writes on these forums) a few days ago....he added that there seems to be a tendency/preference amongst Germans to fly, if possible, with a German airline.

No, that is not true, several market surveys prove that. German travellers feel indeed safer on European AND American aircraft than on aircraft from other carriers. But: I don't think this proves anything, because Germans will keep on flying German carriers because there are not too many alternatives, and there won't be any in the future, there's LH and Germania and technically speaking Deutsche BA and Germanwings, BUT the same goes for Americans, French, Brits... they fly homemade, because there are few others around. As for the long-distance routes...see above, it's not true, but still, people will fly LH to, let's say Asia, because flight time is in most cases much shorter going via FRA than via most European hubs!

Keesje: I think it's a mixture of all the points you mentioned. Certainly LH is waiting to see what happens on the domestic markets before they spend a lot of money...on the other hand, they put up germanwings, because it is in a manner of speaking already there as an LCC. They could build it up in no time, if it works out, if not they'll keep it as a LCC. Right now, this seems to be the logical thing to do.

Regards

Andreas



I know it's only VfB but I like it!
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