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German Domestic Market

Sun Sep 02, 2001 12:20 am

In topics converning Lufthansa´s decision to evaulate an A330 order some people raised the question about the german domestic market and why there is only one big player. I just took a look on the german airport scene and where a new airline might be able to start:

Frankfurt: No chance, LH´s main base and slot constrained

Munich: Deutsche BA´s home base, LH´s second hub. Again no chance for a newcomer .

Hamburg: A small carrier could be able to start here but not for domestic services I think. Hamburg Airlines just tried this some years ago an failed

Dusseldorf: Hell, when you can get a slot there you can be lucky. No chance, not for high-frequent domesxtic services.

Cologne/Bonn: Could be possible to start here but this is CityLine´s main base and thus in strong LH hands. Slight chance for a new domestic carrier but not very big.

Berlin: Not with their three airports. Forget Tempelhof for inner-german services, Tegel could be the best one, Schonefeld is too far apart from everything.

Bremen: Interesting place. But not for a newcomer which is interested in domestic services. I could see an airline launching jet services to LHR, CDG, ZUR, VIE, AMS (all served by turboprops at the moment).

Munster Osnabruck: Nice place. But to small for a domestic upstart.

Nurnberg: Eurowings base. No chance.

Dortmund: Same.

Leipzig: Could be but business traffic in this part of Germany is still smaller.

Dresden: Same.

In addition I like to mention a point: how big is the german domestic market? Deutsche BA has failed to make a profit in the last year´s and they are nearly only operating domestic services and have a strong brand. They tried to move into the MUC-FRA corridor but the only thing they achieved was a big loss. Sometiems they had loadds of 10%. Good for a laugh but nothing more.

Eurowings has penetrated the regional market and has mostly avoided a direct competition to Lufthansa although on some routes there was strong competition. All other regional carriers in Germany are flying under the "TEAM Lufthansa" brand, the only way for them to survive (Cirrus experienced a passenger growth of around 200% on their Mannheim-Berlin route I thin when they converted from their own title to Lufthansa TEAM).

And don´t forget one thing: the german market can´t be compared with the US market. The distances are much shorter here and the public transportation network is a lot better then in the US. So domestic flights are not this necessary like in the US.

Just some thoughs, comments are appreciated.

Flown: A319/320/321,A332/3,A343/346, A380,AT4,AT7,B732/3/4/5/7/8/9,B742/4,B762/763,B772/77W,CR2/7/9/K,ER3/4,E70/75/90/95, F50/70/100,M11,L15,SF3,S20, AR8/1, 142/143,...
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RE: German Domestic Market

Sun Sep 02, 2001 1:28 am

I think one day either Ryanair or easyJet will be going to attack LH's position. Initially not with domestic flights, but after some years they'll also challenge LH on the domestic market. However, it will take some time as the German market is very difficult to penetrate for these airlines (not so much slots available). Anyway prepare to wait a long time before they get into the German market.

As for which airport. My guess is that Dusseldorf and Munich are likely airports . Both airports are located in very large markets. Munich is probabaly the easiest as they have plenty of slots. However, I think that Dusseldorf is better as you avoid LH as much as you can and still serve a large market.

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RE: German Domestic Market

Sun Sep 02, 2001 1:34 am

Dont forget that DeutscheBA could be history in the near future. BA wants to sell DI and if they dont find a new investor they will shut down the Airline. If that happens LH is the only "player" in the German market because EW flies together with LH. Tickets will also get more expensive.
For me, DI should go to more International Destinations like Paris, Moscow or Rome but at that time its only BAs fighter against LH on some routes. The other reason why BA founded DI is that they want to have more German passengers for connecting flights in London/Gatwick.
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RE: German Domestic Market

Sun Sep 02, 2001 1:40 am

I think germany needs a new domestic carrier.
The reason why DeutscheBA is not profitable might be that the planes they use are to big for these routes.
DeutscheBA should change to an aircraft with around 100 seats. I would love it to see a B717 in DeutscheBA colours.

Some words to the slot policy. It is not right that a carrier if he wants to fly out of Frankfurt has no chance to get a slot and if there is one, it will be the worst time at the day.

The domestic market is strong, you only have to take a look on the daily flights to Berlin Munich Hamburg and Frankfurt. There must be some space for a newcomer.

Finally I think a low fare carrier serving domestic routes and some european routes LHR AMS CDG has a good chance to work profitable.

regards SQ
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RE: German Domestic Market

Sun Sep 02, 2001 1:48 am

Most flights out of/ into FRA from nearby german airports have only the purpouse of feeding the long-hauls, there are rarely local pax onboard. LH is experimenting with highspeed train connections from some of these nearby airports (STR, for example) and once these trains are accepted by the passengers and prove to be economically bettter (that shouldn`t be too difficult) LH will end flying on these routes.
One major problem for a new start-up is to get good slots at various german airports, early morning is already hell at FRA and it is not much better in the rest of the country.
And it is extremely expensive to operate on the intra-domestic market, just take a look at the landing fees, atc fees and, no less important, the ground handling fees at the airports.
LH is the biggest customer and receives a good rebate, but a newcomer??

Just my 0.02Euros,
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RE: German Domestic Market

Sun Sep 02, 2001 4:30 am

I would like to comment on three points Flying-Tiger raised in his original post:

1.: Berlin - I don´t quite agree that the three airports there would make things difficult for an upstart, to the contrary: LH´s operations are concentrated at TXL, so a newcomer could build up SXF as an alternative to that - SXF may be distant in terms of kilometers but not time. Due to SXF´s direct rail access to the city centre you can reach the center faster from SXF than from TXL. If you want to go to TXL you have to take the bus - not even a direct one, if you don´t want to pay ridiculous "express" surcharges.
Oh, and THF is the ideal place for domestic point to point traffic, as it´s VERY centrally located. Many German province airports have their only service to THF, like FKB, HHN or MHG (MHG besides HAM).

2.: Dortmund - granted, it´s an EW stronghold - but would that hurt a new airline? No, to the contrary: EW prove there is a strong market which is destined to grow even stronger for a number of reasons: plenty of free capacity, congestion at DUS, the new extended runway and an interesting market at their doorstep - basically the whole Ruhr area, Germany´s biggest "city".

3.: Cirrus Airlines - I´m from Mannheim, and I flew with them - after they joined Team LH. But it was their own fault, and not just the missing Miles&More partnership before they joined: they just had plain Y and C full fares - now they have the whole bundle of LH special fares, W, Q, B, whatever - made them more interesting for me (and other people, I´m sure). And their marketing was bad, nobody hardly knew they were there. Having four names two years didn´t help much either.

Daniel Smile
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RE: German Domestic Market

Mon Sep 03, 2001 1:03 am

For me, it´s very unlikely, that a new carrier will start a big domestic operation in Germany. The reasons have been mentioned before: high costs and fees, rare slots, expanding fast railways service etc. Mainly European Air Express will grow (airlinersonline wrote today that EAE will receive 6 additional ex-EW AT42), due to the fact that they´ve been choosen to be the competitor against LH/EW on some routes like MUC-DTM/PAD und NUE-BER.

A good guess is an expansion of serveral low cost carriers like Ryanair (also Go and Buzz, but very slightly) and perhaps a new entry of Easyjet. But they won´t fly to the expensive big airports like FRA, MUC and DUS. They will stick to smaller ones like SXF and CGN and especially Ryanair to the smallest ones: "Frankfurt"-Hahn or "Hamburg"-Lübeck. That will happen for sure.

Deutsche BA is indeed in a difficult situation. I don´t think, that they´ll shut down operations completely. All is possible at the moment, but it´s just speculation. They have some valuable slots in MUC and especially in DUS and TXL. BA would be silly to give them away.

Just some thoughts about DI:
They failed - together with their owner BA - in creating an overall convincing concept for the german market. A little codeshare-agreement there, few new routes here, that´s not the way it works. I also think - as already mentioned in another post - that they have got too big a/c (only B733 with 136 seats in all Y). A small airline like DI can´t build up new routes with the rather big B733, that´s one main problem. Even LH usually uses Cityline´s regional jets first of all to introduce a new destination or to increase frequencies (except at their hubs). In addition, the support of BA seems to be very weak. OK, they have to pay all their recent losses, but that´s it, there is no overall concept concerning their network, marketing, fleet and frequentflyer program.

Their intra german network is quiet good. Many of the main routes are served, except the ones to FRA (that´s definitly a real lack, because HAM, TXL and MUC-FRA do have many local pax on it, not mainly connecting pax). I see no possibility for DI to serve small airports like BRE, DTM, FMO, LEJ, DRS and so on. They should stick to the major ones in future. The named smaller airports could be served by a partner (perhaps in future by the growing European Air Express EAE - only a thought).

DI is lacking in a small (but good) european network. They have many valuable slots at DUS, TXL and MUC. Especially ex DUS (problems there again are the slot restrictions) and also from some other airports, they should be able to develop some routes to intra-european key destinations with smaller a/c (50seat RJ) in cooperation with the Oneworld partners. France, Spain, Great Britain (dest. like MAN, BHX ...), Italy, Scandinavia for example could be new or growing markets. And some time they have to decide to build up a real hub operation at one airport, in order to concentrate the Oneworld longhaul traffic mainly at one airport, of course beside FRA. FRA (Oneworld longhauls AA,QF, JL and CX already there) or DUS (huge local potential, with fewer LH competition than in FRA and MUC) would be a good solutions for them, but both are lacking in available slots. Again MUC (also a huge and growing local market, but strong LH competition as in FRA) would be keen on providing them with infrastructure und slots. That´s what MUC is actually doing already, but unfortunately DI doesn´t use it, because they don´t have a real plan for the future.

No question, it doesn´t matter what they´ll do, LH will fight them in any case at any place. But that´s the situation where BA could step in. LH and Star Alliance have been able to help establishing BD in England, despite the BAs struggle against it. BA should try the same in Germany and other parts of Europe, that´s my opinion. I´m not anti-LH, but some real competition is extremely necessary. It would be the worst, if DI would remain only as a feeder into LHR/LGW for BA.

Just my thougths. Don´t know whether BA wants to try it once again with a once more restructured Deutsche BA. For BA, this would be a new (esp. financial) adventure. It seems actually, that they don´t want to try it once again ...
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RE: German Domestic Market

Mon Sep 03, 2001 4:43 am

Hello Flying-Tiger

Your post is very interesting, we should have more of them on!

What's your opinion on Mönchengladbach. It is very close to Düsseldorf, isnt'it!?
They could handle some DUS traffic. DUS has a lot of passengers so Mönchengladbach would be a good place to start a new airline.

Greetings from BSL
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RE: German Domestic Market

Mon Sep 03, 2001 4:58 am

imagine how it could be if not Lufthansa but British Airways bought Eurowings!!!!!

i totally agree with almost all of the aspects already mentioned.
the main reason why no airline may start up easily and operate viably in the short term lies embedded in the reason that germany is extremely expensive (mirroring in the landing fees) and that almost every major airport lacks capacity, FRA, TXL and DUS. and that, to the most extent, is the fault of the slow german bureaucracy, which is so slow that it travels back in time!!!

contrary to some opinions, i do think that MUC would be the only logical location for a new start-up and thus i think that DI´s main hub is located extremely well.
and although MUC is one of LH´s main fortress, it´s no way as "protected" by LH than FRA, and with a little help from some Oneworld carriers, DI could expand very nicely. and the FMG would surely welcome such a move...
well, there´s certainly a reason why there´s no CX, QF or AA at MUC, but think of it. if they came to MUC i think DI could feed them very well.
additionally, i do think it´s very sad that DI does not serve more international routes, especially to austria and scandinavia where LH/OS, LH/SK almost enjoy a monopoly.

i don´t know how succesful their co-operation with IB on the MUC-BCN/MAD runs is, but i do think that in co-operation with some other airlines DI could succesfully compete against Lufthansa.

perhaps it was a mistake that DI phased out all it´s smaller aircraft. at some time, they had Fokker 100s and i believe some SF 340s, and perhaps it was wise to replace them but i do think they should have added an additional smaller aircraft to the fleet, to cater profitably for weaker markets.

in my opinion, DI has too small a network and although it serves some of the most important domestic routes, they almost exclusively cater for the O&D markets. and that´s where LH has its hand succesfully on.

the product DI offers may be comparable to LH but except for that, LH offers much more.
DI customers can collect and redeem their miles on most oneworld partners i believe, but oneworld is not very present in germany so most of the people would certainly prefer LH and star as it is much easier to gain excess to the entire network.

If only pure sweetness was offered, why's this bitter taste left in my mouth.
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RE: German Domestic Market

Mon Sep 03, 2001 5:02 am

Mönchengladbach is an option their runway will be streched. But I'm not sure if there would if Mönchengladbach would make sence. EAE is very strong there and what routes could be interesting to be served out of Mönchengladbach.
This city is not that big and a bit far away from the rest of the Ruhrgebiet.
Topic Author
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RE: German Domestic Market

Mon Sep 03, 2001 11:00 pm

In my opinion Mönchengladbach is a regional airport. They call themselves "Düsseldorf Express Airport" but no airline has moved from DUS to them. The only carrier operating "sizeable" operations out of Mönchengladbach is European Air Express. The airport would make some sense if the complete regional business could be moved from DUS there but that would definetly need a new - not yet developed - infrastructure:
a high-speed rail-link to keep the cennecting times at current levels.

So Mönchengladbach isn´t really the airport a start-up would desire.

In a second post I will outline something Frankfurt could think about.
Flown: A319/320/321,A332/3,A343/346, A380,AT4,AT7,B732/3/4/5/7/8/9,B742/4,B762/763,B772/77W,CR2/7/9/K,ER3/4,E70/75/90/95, F50/70/100,M11,L15,SF3,S20, AR8/1, 142/143,...

RE: German Domestic Market

Mon Sep 03, 2001 11:57 pm

Hey you were forgetting the most important German airport  Smile/happy/getting dizzy STUTTGART (STR) !!
I think an airline could start up here but again not domestic. Also STR lacks space, so that's another negative.
But still I believe there's quite a market here and I still hope to see CO someday here, too.

I generally agree with some of the above statements that an airline like Go, Ryanair or Easyjet should come to Germany and start with cheap flights to some European places. I think Germans would accept that very much.

As for the domestic German market I think no airline ahs a real chance since not even LH is doing really good domestic I think. Travel distances in Germany are just too short to make profit.
I hope Deutsche BA won't drop out as they are still losing money even 10 years after their introduction.


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RE: German Domestic Market

Tue Sep 04, 2001 1:03 am

actually, except for the the FRA-CGN, -DUS, -STR routes LH is making money, more or less, on all its domestic services. perhaps not recently, but certainly in healthier times...

If only pure sweetness was offered, why's this bitter taste left in my mouth.

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