AF185
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LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 6:19 am

According to Bloomberg, LH is considering setting up a JV or a whole new carrier, to offer long haul low cost flights.
The main target is Asia to counter the competition from Gulf Carriers

Quote:
Deutsche Lufthansa AG (LHA) is weighing whether to form a partnership with another carrier or start its own new long-haul, low-cost venture to help it expand in Asia, Chief Financial Officer Simone Menne said.

Europe’s second-largest airline won’t be able to keep pace with Persian Gulf-based rivals such as Emirates airline and Etihad Airways PJSC without a change in strategy, Menne said at a briefing with reporters in New York.

Whole story here: http://www.bloomberg.com/news/2013-0...-cost-carrier-targeting-asian.html

We have seen Air Asia failing in linking Asia to Europe on a low cost basis. Can LH succeed there?

[Edited 2013-03-25 23:20:45]
 
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Mortyman
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 6:26 am

Well, Norwegian is gonna do low cost too. Remains to be seen who will be the most succesful ...
 
SASMD82
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 7:09 am

I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!   
 
AndyEastMids
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 8:42 am

The Gulf carriers, from which Lufthansa sees the threat as coming, have built their business in part on offering a quality service, not a low cost service. I wonder why Lufthansa thinks something cheap and nasty might be the solution?
 
PanHAM
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 8:56 am

They are pondering all options, including retreat from those markets.

IMHO, a four class system, F J Y+ and Y- is already a LCC combined with a regular service carrier in the same aircraft.

Thje Guld carriers have 40% less costs than LH and there is no way that can be changed and offer a similar service.

.
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seahawk
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 9:40 am

Low cost could also mean, lower operating costs. Think about an LH owned airline based in Asia.
 
JU068
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 9:42 am

I guess they would fly them to destinations where there is a considerable O&D market and where they would have to compete, not only with the Gulf carriers, but with other Asian carriers which have a lower cost structure- airlines like Thai for example.

I wonder if these flights would replace the Lufthansa ones or if they would operate from secondary airports. Maybe out of airports where Germanwings have a considerable presence so as to offer connections.
 
cuban8
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:06 am

Quoting Mortyman (Reply 1):
Well, Norwegian is gonna do low cost too. Remains to be seen who will be the most succesful ...

Remains to be seen if Norwegian will be successful at all...

Quoting JU068 (Reply 6):
Maybe out of airports where Germanwings have a considerable presence so as to offer connections.

I think you might be on to something. If this would be the case, I believe they would compete against Air Berlin and Condor, rather than the Gulf carriers.
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PanHAM
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:24 am

Quoting cuban8 (Reply 7):
Condor, rather than the Gulf carriers.

even Condor needs the connectiviy which is given only at FRA and MUC. DE has covered all the nich destinations around the globe and their only probem right now are the working conditions aat FRA.

If CGN, just to mention one, would be viable it would be done by Asian LCCs.

Of course LH can start, with a local sponsor, an airline in the UAE, may be at DWC. That would be fun to watch.
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bavair
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:25 am

Could this have to do with the ongoing talks with CA about close cooperation? It wouldn't be their first JV (Ameco Beijing). Or TK?
 
JU068
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:28 am

Quoting cuban8 (Reply 7):
Remains to be seen if Norwegian will be successful at all...

Didn't the Norwegian court rule against basing foreign crew in Asia? That could be a great problem for the airline.

Quoting cuban8 (Reply 7):
I think you might be on to something. If this would be the case, I believe they would compete against Air Berlin and Condor, rather than the Gulf carriers

Well, I think this might be a response to the growing presence of the Gulf carriers all across Germany. Naturally both Air Berlin and Condor are not making Lufthansa's life any easier.
 
PanHAM
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:43 am

Quoting bavair (Reply 9):
Could this have to do with the ongoing talks with CA about close cooperation? It wouldn't be their first JV (Ameco Beijing). Or TK

Running an MRO shop reqzuires a local partner and is fully subject to local laws bsides the world wide valid JAA/FAA rules.

Running an airline as a JV is a different storsy starting from the traffic rights. A German compaqny would always have a minority when such a JV is ased outside Germany, Think what happened to JADE.

besides, both CA and TK home countries have different economic systems, not speaking of different cultures. Plus, we see what just happens inside the EU.
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rutankrd
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:50 am

Why not simply buy back the 1/3 stake in Thomas Cook - Condor.

Thomas Cook could do with the money and the Condor brand has been associated with LH for half a century

For most of that time it was wholly owned and operated both Mediterranean and Long haul Holiday flights.

[Edited 2013-03-26 04:00:35]
 
PanHAM
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 11:04 am

Buying back the Condor shares is an option, but LH and DE are co-operating anyhow since LH feeds the long haul flights of DE and there are few if any overlapping markets. At least not long haul.

besides that DE is not a real LCC but offeres certain services a true LCC does not, like connecting flights, through checked bags and many more.
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 11:48 am

Quoting SASMD82 (Reply 2):
I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!

This is the worst idea ever posted. Switzerland is Business center with rich bankers and people willing to pay for J class tickets. The reason for the 777 order is to carry more people then the A340 currently in the fleet. SWISS and Swissair have always been full service arlines and to suggest otherwise is wrong, if Eddelweiss should be expanded is another question. Eddelweiss is the LCC division of Swiss.
 
JU068
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 12:01 pm

It is interesting, just because it was mentioned here, that after six years Condor will be launching longhaul flights from Munch.
They will base two B767-300s and will fly to Santa Clara, Cancun, Mauritius, Mombassa, Montego Bay, Puerto Plata, Punta Cana and Varadero. They are also launching Bangkok from Frankfurt.
 
BrouAviation
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 12:07 pm

Quoting SASMD82 (Reply 2):

I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!

I hope that was tongue-in-cheek. As that is most probably the stupidest suggestion ever done.Switzerland is one of the highest yielding markets in Europe, and LX is one of the few parts of LH making money the way it is right now. And it is shockingly affordable to fly LX already, by the way. They come up as the cheapest option 80% of the time for me..

EDIT:

Quoting jfk777 (Reply 14):
This is the worst idea ever posted.

You beat me to it, was too eager to reply so skipped your post initially.

[Edited 2013-03-26 05:09:10]
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 1:02 pm

Quoting AndyEastMids (Reply 3):
have built their business in part on offering a quality service, not a low cost service

I think this is a major misconception--people fly the ME carriers because they are either cheapest or offer the best schedule, and compared to AI/PK and other carriers in the region, that's not hard to do. EK's product in F is nice, but otherwise is not particularly good in any way, but its India connectivity is industry leading. Nonetheless, people will pay a premium to go nonstop; whether it's enough to cover the increased costs is another issue. Ultimately LH needs to reduce its costs, not start another operation.
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SASMD82
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 1:20 pm

Quoting jfk777 (Reply 14):
Quoting SASMD82 (Reply 2):
I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!

This is the worst idea ever posted. Switzerland is Business center with rich bankers and people willing to pay for J class tickets. The reason for the 777 order is to carry more people then the A340 currently in the fleet. SWISS and Swissair have always been full service arlines and to suggest otherwise is wrong, if Eddelweiss should be expanded is another question. Eddelweiss is the LCC division of Swiss.
Quoting BrouAviation (Reply 16):
Quoting SASMD82 (Reply 2):

I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!

I hope that was tongue-in-cheek. As that is most probably the stupidest suggestion ever done.Switzerland is one of the highest yielding markets in Europe, and LX is one of the few parts of LH making money the way it is right now. And it is shockingly affordable to fly LX already, by the way. They come up as the cheapest option 80% of the time for me..

EDIT:

Quoting jfk777 (Reply 14):
This is the worst idea ever posted.

You beat me to it, was too eager to reply so skipped your post initially.

Guys, this is called irony, hence my 'duck' at the end. Of course this will not be happening.
 
a3xx900
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 3:02 pm

Maybe rather a "Lufthansa Asia" based in DXB. Isn't the treaty still active that allows German carriers to operate routes out of Dubai (and EK routes out of Germany)? That way they could cut costs and offer services from Germany to Asia (with a DXB stopover).
Just throwing that out there. IMHO this is more feasible than LH starting a real no-frills service. As said above, costs would still be the same, and how much less frills could you get? Food for purchase? But that's it?
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Skyguy
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 3:45 pm

Quoting AndyEastMids (Reply 3):
The Gulf carriers, from which Lufthansa sees the threat as coming, have built their business in part on offering a quality service, not a low cost service. I wonder why Lufthansa thinks something cheap and nasty might be the solution?

If LH can provide a service at a cheap enough fare to long haul destinations non-stop, thereby enticing those customers who currently use the Middle East carriers and their enhanced servicing offering, then this may be a successful strategy.
Problem is LH's costs, if they can not offer a fare which is high enough to make it economically viable for them, and low enough to attract customers, then this will not work.
However, the kind of travelers this is aimed at is the Economy class vacationers and the like (basically non-business travelers) for whom non-stop travel fares from Europe to destinations n Asia/Africa/S.America are currently too pricy and don't mind the stopover connection in DXB, AUH, DOH etc. It is this group of customers that LH want to target.

We have seen quite a few full service established airlines in Europe and also in the US try out having subsidiaries providing LCC services, but eventually none appear to have succeeded in the long term. Maybe LH has this figured out and can make a go of it.
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LH506
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 5:24 pm

I see it this way.

The cheap end Y customer to BKK, DEL, KUL, DPS...finds a cheaper one stop option from Europe with TK, EK, QR or many times AF-KL

The high end Y customer looks for flight convenience. From many European major cities you fly one stop via DXB, IST, DOH offering more destinations. LHs presence in Asia is rather shrinking, they left MNL, Jakarta, CCU, HYD over the last years, offer inconvenient less than daily one stops like KUL where the competition is non stop daily. Why would you pay to fly LH?

The C class passenger looks for the same as the high end Y. What is LHs distinguishing advantage? I think none. LHs is not bad either, but you would not pay more to fly them to pay the higher operating costs in Germany.

LH relied to long on their name and star alliance connections instead of building up and developing their own network including holiday destinations. Now it is too late. The business passenger enjoys TK as much as LH, the leisure passenger is long gone. I do not know how profitable the whole 1st class story still is, incl. limousine service, own terminal etc. Looking at the fact that KLM is highly profitable (at least from what I read here on the forum) without offering this, I at least have my doubts that LH took the right strategic decision.
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 5:35 pm

They can bet on Condor and reinforce their traditional familial ties...
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airbazar
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 6:13 pm

Quoting AndyEastMids (Reply 3):
The Gulf carriers, from which Lufthansa sees the threat as coming, have built their business in part on offering a quality service, not a low cost service. I wonder why Lufthansa thinks something cheap and nasty might be the solution?

Low cost is not the same as no frills. It does not have to be "cheap and nasty". At the end of the day, the gulf carriers have built their business by offering a more convenient alternative and at times a cheaper alternative. 95% of passengers don't care about the perceived quality of the gulf carriers. They fly with them because they are cheaper. Nothing more and nothing less.
 
behramjee
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 6:38 pm

There are two things I feel that LH can do here instead of creating a whole new airline for this very purpose:

1. Order a bunch of B777-300ERs and configure them in more or less the same manner as Air Canada has for high density long haul operations i.e. 430-440 seats in a J / Y class configuration. Routes that can support such a high density layout include BKK, MIA, PEK, ICN, DEL, KUL, JNB, EZE and GIG.

2. If ordering a dedicated fleet of B77Ws (over a dozen required minimum) for this type of service is too capital intensive, then it could look into reconfiguring many of its A346s into a high density 2 class layout seating 380-390 passengers.

Question though...if the B748s had only the upper deck as J class and the lower deck as an all economy only, how many seats maximum could it accommodate on board?
 
SASMD82
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 6:54 pm

Quoting behramjee (Reply 24):
1. Order a bunch of B777-300ERs and configure them in more or less the same manner as Air Canada has for high density long haul operations i.e. 430-440 seats in a J / Y class configuration. Routes that can support such a high density layout include BKK, MIA, PEK, ICN, DEL, KUL, JNB, EZE and GIG.

OK, my idea to use the 77Ws that were ordered for LX (ok, it was a little sarcasm/irony) was claimed by jfk777 and BrouAviation to be the most stupid answer ever on the airliners.net forum (obviously these guys lack a sense of humour) but I am not kidding when saying a fully Y class equiped 77W to use for high density low cost segment makes sense. It is sooo efficient.

Quoting behramjee (Reply 24):
Question though...if the B748s had only the upper deck as J class and the lower deck as an all economy only, how many seats maximum could it accommodate on board?

Not sure too but these are still 4 engines. On the other hand, how many Y class seats would fit into a one deck Y class on a 748? Still think 77W would make more sense.

Quoting behramjee (Reply 24):
then it could look into reconfiguring many of its A346s into a high density 2 class layout seating 380-390 passengers.

Are you sure they will be able to put this many people inside an A346? Iberia puts 350 people squeezed inside their A346.
 
aloges
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 7:03 pm

Quoting AndyEastMids (Reply 3):
The Gulf carriers, from which Lufthansa sees the threat as coming, have built their business in part on offering a quality service, not a low cost service. I wonder why Lufthansa thinks something cheap and nasty might be the solution?

Are you familiar with their current CEO? He's a die-hard cost cutter before all else.

[Edited 2013-03-26 12:05:14]
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MAH4546
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 7:12 pm

Quoting behramjee (Reply 24):
1. Order a bunch of B777-300ERs and configure them in more or less the same manner as Air Canada has for high density long haul operations i.e. 430-440 seats in a J / Y class configuration. Routes that can support such a high density layout include BKK, MIA, PEK, ICN, DEL, KUL, JNB, EZE and GIG.

I don't think LH wants to eliminate first to Miami and Johannesburg.

The healthiest first-class routes include Frankfurt to Kuwait, Johannesburg, Riyadh and Miami, Lufthansa spokesman Michael Lamberty said.
http://www.bloomberg.com/news/2013-0...s-fleet-below-british-airways.html
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mbm3
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 7:20 pm

Pack the coach customers in on top with lower frills fares and a la carte services and build profit with the cargo revenue below. Interesting concept and one that might very well work if it is run lean and mean...
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airbazar
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 7:20 pm

Quoting behramjee (Reply 24):
There are two things I feel that LH can do here instead of creating a whole new airline for this very purpose:

Those ideas fail to create a low cost option which is the entire point of this exercise. The single biggest line item in a legacy carrier after fuel, is labor. A new brand/carrier is needed in order to take advantage of lower cost labor. That's why the gulf carriers and for the most part Asian carriers too make profits hand over fist. It's because their labor costs are cheap.
 
ytz
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 9:46 pm

The fact that they think an LCC is a solution to the ME3+TK shows that LH doesn't get it.

People travel by EK/EY/QR not just because of the fare (which are rarely ever the cheapest...though usually reasonable). Service is better and in some cases there are more options. They have flight attendants and counter-staff who speak their language. And the biggest reason of all is that they fly to places that people actually want to travel to. Add all that up and the ME3 have built a following in India and the Indian diaspora. I know people who don't have Jetprivilege or Aeroplan membership but have Emirates Skywards memberships and consider those more valuable.

Until recently, LH put some of its worst equipment on India routes. After flying an AC or UA trip to connect to LH, the whole experience will leave most with a poor impression of not just LH but Star Alliance as a whole.

Since discovering TK and its Comfort Class last year, I know that I will personally avoid the AC/LH combo to India for the foreseeable future. TK gets my business. I have booked 3 Comfort Class tickets YYZ-BOM with a 3 day stop in IST for May. I spent $6063 for those 3 tickets. AC/LH would never have won my business because they don't offer Y+. And when AC will offer it this summer, the prices look set to be utterly ridiculous with worse service than TK. For comparison, TK wants $2404 for a round-trip Y+ on YYZ-BOM in August. That's about 16 hrs worth of flying time. AC wants $1800 for for roundtrip Y+ on YYZ-CDG via YUL. That's about 8 hrs worth of flying time. TK is 7 abreast with 42 inch pitch. AC is 8-abreast with 38" pitch. Oh and LH? LH wants $2000 for the same trip in Economy.

Now that I can get decent service and a reasonable price on a Star carrier, if TK is flying to my destination, I won't even bother looking at other websites.

If LH actually wants a shot at winning customers into Asia there's a number of steps it has to take:

1) Fly to more destinations. For example, 5 destinations in India, no service to Bali, etc. is not enough.
2) Up some of their offerings. IFE, food, etc. Consider offering Y+.
3) Use bigger and better equipment. Why are they still sending ancient geriartic 744s to India with 17.5" seats in Y and a middle seat in J. Do they really think they can compete with the likes of EK with that?
 
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 10:58 pm

Hasn't there been talk about LH converting a number of the remaining B744 in a higher density 2-class configuration. That could well do the job. Look for an immediate end to some of the existing LH routes in lieu of an operation by this carrier, be it under the Lufthansa name or something else. BKK, KUL and SGN are likely the first ones to go. MNL, DPS and CGK may be (re-)opened.
 
steve6666
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 11:24 pm

Sorry, I am confused

Quoting YTZ (Reply 30):
1) Fly to more destinations. For example, 5 destinations in India, no service to Bali, etc. is not enough.
2) Up some of their offerings. IFE, food, etc. Consider offering Y+.
3) Use bigger and better equipment. Why are they still sending ancient geriartic 744s to India with 17.5" seats in Y and a middle seat in J. Do they really think they can compete with the likes of EK with that?

1. Since when has Bali been an attractive high yielding destination for a European carrier? Or a high yielding destination for any carrier come to that? How many other European carriers fly to Bali?
2. They did more than consider it, they decided to launch it about 6 months ago didn't they?
3. How is the middle seat in J on Lufthansa any less attractive than the middle seat in J on Emirates? There was a singularly foul photograph of the middle seat in J on an EK 777 on the top photos page the other day. Emirates send their highest density aircraft to serve the Indian subcontinent, and with no offence but when you go through DXB at the same time as a flight from the subcontinent, it isn't exactly a heaving mass of high yield J and F class passengers.
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RE: LH To Launch A Long Haul Low Cost Carrier?

Tue Mar 26, 2013 11:50 pm

Quoting jfk777 (Reply 14):
Quoting SASMD82 (Reply 2):
I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!

This is the worst idea ever posted. Switzerland is Business center with rich bankers and people willing to pay for J class tickets. The reason for the 777 order is to carry more people then the A340 currently in the fleet. SWISS and Swissair have always been full service arlines and to suggest otherwise is wrong, if Eddelweiss should be expanded is another question. Edelweiss is the LCC division of Swiss.

I basically agree with your comments, although I would say Edelweiss is the "leisure carrier" of Swiss, rather than an "LCC". The terms "low cost" and "Switzerland" are almost contradictions in terms considering the high cost of almost everything in Switzerland.
 
ytz
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 12:16 am

Quoting steve6666 (Reply 32):
1. Since when has Bali been an attractive high yielding destination for a European carrier? Or a high yielding destination for any carrier come to that? How many other European carriers fly to Bali?
2. They did more than consider it, they decided to launch it about 6 months ago didn't they?
3. How is the middle seat in J on Lufthansa any less attractive than the middle seat in J on Emirates? There was a singularly foul photograph of the middle seat in J on an EK 777 on the top photos page the other day. Emirates send their highest density aircraft to serve the Indian subcontinent, and with no offence but when you go through DXB at the same time as a flight from the subcontinent, it isn't exactly a heaving mass of high yield J and F class passengers.

You're entire argument is based on J and F in a thread about LH launching a long-haul LCC?

1. You missed my point. Bali isn't a high-yield destination. But it is perfect for an LCC. Ditto lots of places in South and Southeast Asia.

2. Right. We still haven't heard much about it. And we don't know if it'll be deployed to their LCC markets. My argument would be that Y+ and higher density Y with less J and F is probably how LH can compete in these markets.

3. Again. You missed my point. And moreover, you'd be surprised at the amount of premium traffic that there is to South Asia. A lot of the more working class folk you see at DXB are O/D. USA-India is far more premium oriented than UAE-India. Don't forget that the Indian diaspora in the USA is one of the most successful diasporic communities anywhere in the World. Average incomes are 20% higher than that of the average American. Yet, EK seems to have a better shot at capturing more of this traffic than LH. Like I said, there's more to that story than the price of the ticket.

[Edited 2013-03-26 17:19:00]
 
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 12:40 am

Quoting YTZ (Reply 30):
People travel by EK/EY/QR not just because of the fare (which are rarely ever the cheapest...though usually reasonable). Service is better and in some cases there are more options
Quoting YTZ (Reply 30):
And the biggest reason of all is that they fly to places that people actually want to travel to

I agree 100%

The ME3 are rarely the cheapest in my experience. Their biggest draw is network. For example, from Australia nobody can get you more places in Europe without a nice jaunt through LHR, FRA or CDG.

Also, they are perceived as providing a higher quality offering than QF or BA. We can debate that until the cows come home (I personally think QF is better than EK) but public perception is hard to shift.

Quoting YTZ (Reply 30):
I know people who don't have Jetprivilege or Aeroplan membership but have Emirates Skywards memberships and consider those more valuable

Same, I know several people with Skywards or EtihadGuest (or Krisflyer) status, but not QF or DJ. This is especially true of a people I know who travel to Europe a lot on business, but don't do domestic business trips. Don't forget that for us every trip to Europe is at least 1 stop, so QF really has no advantage in picking up that business.



Turning to LH, I think they need to look at the success of such ventures in the past. Obviously AC has just jumped on this bandwagon as well, but we need to remember that there has only ever been one successful LCC-within-a-legacy. JetStar's long haul network (ex-Australia) is built around just one destination: Japan. Australia is a massive tourist destination for Japanese, but it is a low yielding destination. Therefore the LCC is appropriate, just as the Euro charters serve Dominican Republic, Cuba, Cancun etc. The European market is different, as those big leisure markets are comprehensively served by the charters. As for, say, FRA-BKK we should look at the success of the LON-KUL and HKG-OAK attempts by AirAsia and Oasis to see the possible outcome.
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columba
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 5:55 am

My idea what could happen is that LH tranfers a few A330s to Germanwings and offer direct flights from DUS, BER and HAM.........
It will forever be a McDonnell Douglas MD 80 , Boeing MD 80 sounds so wrong
 
steve6666
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 11:01 am

Quoting YTZ (Reply 34):
1. You missed my point. Bali isn't a high-yield destination. But it is perfect for an LCC. Ditto lots of places in South and Southeast Asia.

2. Right. We still haven't heard much about it. And we don't know if it'll be deployed to their LCC markets. My argument would be that Y+ and higher density Y with less J and F is probably how LH can compete in these markets.

3. Again. You missed my point. And moreover, you'd be surprised at the amount of premium traffic that there is to South Asia. A lot of the more working class folk you see at DXB are O/D. USA-India is far more premium oriented than UAE-India. Don't forget that the Indian diaspora in the USA is one of the most successful diasporic communities anywhere in the World. Average incomes are 20% higher than that of the average American. Yet, EK seems to have a better shot at capturing more of this traffic than LH. Like I said, there's more to that story than the price of the ticket.

You introduced the argument about a horrible middle seat in J on LH in a LCC discussion and seemed to ignore the fact EK have an equally horrible middle seat in J. And the reason I am missing your point is because your action points were inconsistent with the rest of your argument. FWIW, I think LH would have to be nuts to compete with the Gulf carriers in a race to the bottom because they cannot get their cost base down to the same level for any given service standard. However.

1. Disagree. If Bali were an attractive LCC destination with a sufficient market for a Europe direct flight then the charters would fly there from Europe, and I cannot think of a direct charter - although I stand to be corrected. As a hub? Bit far east for a Europe-linked LCC isn't it?

2. Disagree, there have been two threads on here in the last two weeks.

3. I agree there very probably more to this than the price of the ticket, but large parts of South East Asia remain hugely price sensitive, in all classes of travel. I don't think though that it would be an effective strategy for LH to compete using an LCC as I still don't think they will be able to match EK on cost and therefore in the medium term price - unless the LCC is also going to connect from somewhere in Europe to the US/Canada/wherever. But if that happens the unions would go nuts and even then the cost of government regulation would I think make it non-viable.
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PanHAM
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 11:30 am

Back to the PR statement by LH, they are looking at all options, including pulling out of certain markets, which they have done already in India.

setting up an LCC based somewhere in Europe is a no go. Even with the Germanwings feed at CGN this would not be viable. Besides that, the yield management system successfully sells seats already for low cost prices, on their regular scheduled long haul flights ex FRA MUC DUS.

setting up a carrier at DWC which I believe in theory could be done would not be an option either. There is no legal security for such an investment.

Cooperation with carriers in the Middle East could be if there are any left). TK already coops in *alliance and happily competes direct at the same time serving every prime, secondary and tertiary city in Germany, supported by healthy ethnic traffic. I am waiting for Siegerland getting direct flights to IST, may be Kassel is first.
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airbazar
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 11:53 am

Quoting YTZ (Reply 30):
The fact that they think an LCC is a solution to the ME3+TK shows that LH doesn't get it.

Right. Arguably the single most succesfull airline in the world which has been consistently profitable even in the last few years despite a global economic recession doesn't get it.  
Quoting RyanairGuru (Reply 35):
The ME3 are rarely the cheapest in my experience. Their biggest draw is network. For example, from Australia nobody can get you more places in Europe without a nice jaunt through LHR, FRA or CDG.

That's because you're in AUS where they control the price point. If you're in Europe where there's a lot more competition, the ME carriers are often the cheapest. That is especially true from the US. But I do agree that convenience does play a significant role.
 
ytz
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 1:56 pm

Quoting airbazar (Reply 39):
Right. Arguably the single most succesfull airline in the world which has been consistently profitable even in the last few years despite a global economic recession doesn't get it.

For a second, I thought you were talking about Emirates....   

In the context of this discussion, yes, I don't think LH "gets it", if they think an LCC is a solution to competing with the ME3.

Quoting airbazar (Reply 39):
That's because you're in AUS where they control the price point. If you're in Europe where there's a lot more competition, the ME carriers are often the cheapest. That is especially true from the US.

No. It's not true from the US or Canada either. There's airlines like SU, for example, that are consistently lower to India. And you can even find fares on BA or LH that are occassionally lower.

Quoting airbazar (Reply 39):
But I do agree that convenience does play a significant role.

More than a significant role. With only 5 destinationations in India, to EK's 10, that's a huge difference.

For example, the huge Keralite community in Texas (many of whom are successful middle-class professionals)? EK is one of the few one-stop choices they have to India. And EK covers two destinations in Kerala. LH? Zero. And that's a state of 34 million people with one of the largest and most successful diasporic communities anywhere.

That's just one example.

Quoting steve6666 (Reply 37):
You introduced the argument about a horrible middle seat in J on LH in a LCC discussion and seemed to ignore the fact EK have an equally horrible middle seat in J.

And you cherry-picked one point, missing the wider argument. As recently as 2011/2012, you could get a ratty old bird to India on LH that didn't have seatback IFE. Now if you were a passenger who had a choice of flying that or EK/EY/QR to India, for the same fare, what would you pick? And that's exactly the choice many diasporic Indians traveling from the US or Canada make regularly. Hence the growing popularity of EK/EY/QR/9W and lately TK. Service is about a lot more than just your seat.

Quoting steve6666 (Reply 37):
If Bali were an attractive LCC destination with a sufficient market for a Europe direct flight then the charters would fly there from Europe, and I cannot think of a direct charter - although I stand to be corrected.

Again. Missing the point. At present, no charter from Europe, because it's a rather long trip. But it's places like this that facilitate EK's network. My bet is that if EK had a slightly smaller aircraft, they'd find a market in Bali. And if they don't I expect EY or QR will shortly. That's the beauty of these airlines. They make such obscure destinations work through network effects. Something LH is increasingly missing out on, completely.

Quoting steve6666 (Reply 37):
As a hub? Bit far east for a Europe-linked LCC isn't it?

Huh? When did I suggest DPS as a hub? I would guess that any LH LCC would be European based.

Quoting steve6666 (Reply 37):
I don't think though that it would be an effective strategy for LH to compete using an LCC

I actually agree. Nothing will lose them more money than putting up an LCC against EK/EY/QR/TK. But they better figure it out soon. Many of those passengers flying to South Asia, Africa and Southeast Asia don't just fill planes from DXB to those destinations, they fill planes across the Atlantic first. If LH doesn't figure it out, they're are going to find their TATL flights a little less crowded too.

Unfortunatley for LH, that's also where the growth. Europe is getting older and will be poorer (relative to the past) for the foreseeable future. Hardly people who can afford regular long-haul travel. If they can't figure out how to tap into the emerging markets, the future will be far less bright for them. And that goes for many other European airlines too.
 
ytz
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 2:11 pm

Quoting PanHAM (Reply 38):

LH can compete. I would say they gotta build their network. And they have to rejig the fleet. Some high-density aircraft for lower-yielding destinations.
 
airbazar
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 5:59 pm

Quoting YTZ (Reply 41):
LH can compete. I would say they gotta build their network. And they have to rejig the fleet. Some high-density aircraft for lower-yielding destinations.

It still doesn't take away from the fact that their labor costs are a lot higher.
LCC can mean a lot of different things. JetBlue has better service than LH, in the same short haul category, for example. 90% of passengers flying with the ME carriers don't give a crap about the service either. They are only after the price and convenience. If LH's LCC can provide p2p service from secondary cities in Europe to popular long haul destinations, with a decent service, they have a chance of being very succesful against the so called ME3. But they can't do that with mainline alone because it means connecting via FRA/MUC and using high cost labor.

Quoting YTZ (Reply 40):
Unfortunatley for LH, that's also where the growth. Europe is getting older and will be poorer (relative to the past) for the foreseeable future.

And yet, Europe-N.America was the market with the largest growth last year. Despite an economic recession in Europe. Asia-Pacific is expected to become the largest aviation market in the world in 20 years, followed by the Atlantic (Europe-Americas). The ME carries are in the wrong place to be leaders in those markets. I'm not saying they won't be domainant carriers, because they will. But the economic engines of the world will still be in Europe, N.America, and East Asia.
 
aloges
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RE: LH To Launch A Long Haul Low Cost Carrier?

Wed Mar 27, 2013 6:02 pm

Quoting airbazar (Reply 42):
90% of passengers flying with the ME carriers don't give a crap about the service either. They are only after the price and convenience.

Where did you get that number?
Don't cry because it's over, smile because it happened.
 
airbazar
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RE: LH To Launch A Long Haul Low Cost Carrier?

Thu Mar 28, 2013 12:07 am

Quoting aloges (Reply 43):
Where did you get that number?

From the same place every one does. It's a common fact that 90% of passengers are only interested in one thing: the lowest fare. That's true in any part of the world and with any carrier. it's not just Emirates.
 
ytz
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RE: LH To Launch A Long Haul Low Cost Carrier?

Thu Mar 28, 2013 1:23 am

Quoting airbazar (Reply 42):
It still doesn't take away from the fact that their labor costs are a lot higher.

Not directly. Cost can certainly be diluted with higher density aircraft.

Quoting airbazar (Reply 42):
If LH's LCC can provide p2p service from secondary cities in Europe to popular long haul destinations, with a decent service, they have a chance of being very succesful against the so called ME3.
Quoting airbazar (Reply 42):
But they can't do that with mainline alone because it means connecting via FRA/MUC and using high cost labor.

I highly doubt there'll be a case for secondary cities in Europe to connect directly to ULH destinations. There might be a case for LCC service through a hub though. The costs aren't an issue in FRA/MUC. The airports aren't the problem. LH is.

Quoting airbazar (Reply 42):
And yet, Europe-N.America was the market with the largest growth last year. Despite an economic recession in Europe.

Europe has never been cheaper to travel to. But that won't last. And most of the better yielding traffic is the kind that transits through Europe.
 
SCQ83
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RE: LH To Launch A Long Haul Low Cost Carrier?

Thu Mar 28, 2013 1:35 am

Quoting Skyguy (Reply 20):
However, the kind of travelers this is aimed at is the Economy class vacationers and the like (basically non-business travelers) for whom non-stop travel fares from Europe to destinations n Asia/Africa/S.America are currently too pricy and don't mind the stopover connection in DXB, AUH, DOH etc. It is this group of customers that LH want to target.

Not everyone lives in Frankfurt, Paris or London... nor is flying to Hong Kong or Tokyo. The ME3 have established themselves particularly well in "second-tier" cities in Europe, where you would anyway need to do a 1-stop to go (almost) anywhere in Asia. And I am talking about MAD, MXP, BCN, GVA, HAM, MAN... The most obvious case is the UK, with EK now 3 or 4 daily to MAN (and 2 A380s!).

IMO Europe-Australia is the best sample. Not long ago, you would almost need to go via LHR wherever you are flying from Europe (and then another stop en route in Asia, and then basically to SYD or MEL). With EK/EY/QR/QF you can fly with one-stop only from Venice to Perth or from Hamburg to Adelaide. In that sense, the ME3s have no rivals.

I agree with YTZ about those "secondary" destinations... places like DPS, MNL, CGK, HKT, RGN, CCU, MLE... were or are really complicated to fly from Europe with European carriers (sometimes with none or only one or two direct services)... the ME3 make it so much easier with a direct flight from the region (and in some cases with multiple daily flights). For me, EK/QR in Europe (where is uncomparably more popular than in the US) is a bit like Ryanair... in the sense that they connect (the ME3 with one stop) points that before were really complicated to get to... it is not only the price, but convenience (the same way that Ryanair is, for instance, the only non-stop from Brussels or London to many medium and small towns around Europe).

Also, even as crowded as they can get, I think DXB/DOH/AUH are seen are more "hassle-free" airports, and easier to transit. If you are flying from Nice to Shanghai... you can get easily stuck or delayed with a snowstorm or a strike in CDG or FRA... with Gulf carriers still you have more security in that sense. And last but not least, with the ME3 you fly real J/F all the way, and in Economy you have AVOD and a "big" plane all the way... instead of being stuck in a narrow-body with no real business class during part of your trip.

Quoting airbazar (Reply 42):
If LH's LCC can provide p2p service from secondary cities in Europe to popular long haul destinations, with a decent service, they have a chance of being very succesful against the so called ME3.

You cannot compete... even if that is viable (which I don't think so), the number of options would be quite limited (maybe HAM-BKK and those kind of flights???... probably not even daily). The good thing about EK is that if you want to fly from Hamburg to Bangkok, you got 2 daily HAM-DXB and 4 or 5 daily DXB-BKK... so you can basically tailor your departure and arrival times instead of getting 2 or 3 hypotetical weekly direct flights paid at a premium. And also, coming back to the "secondary" destinations, the ME3 are much quicker to react to untapped/emerging markets. Probably many people just fly/vacation in BKK because it was the easiest place to get into from most of the Europe... if you can get with similar times/prices to Viet Nam, Cambodia or Philippines (fast-growing tourism destinations), some customers (and not necessarily the most cash-trapped) will switch. Countries like Iraq, Myanmar or Viet Nam (the new wave of emerging economies - if they are not yet -; and again the 2nd and 3rd tier cities in India where most growth is expect to happen) are well connected with those ME3, yet they lack European connections.

[Edited 2013-03-27 18:49:56]
 
RyanairGuru
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RE: LH To Launch A Long Haul Low Cost Carrier?

Thu Mar 28, 2013 2:12 am

Quoting SCQ83 (Reply 46):
IMO Europe-Australia is the best sample. Not long ago, you would almost need to go via LHR wherever you are flying from Europe (and then another stop en route in Asia, and then basically to SYD or MEL). With EK/EY/QR/QF you can fly with one-stop only from Venice to Perth or from Hamburg to Adelaide. In that sense, the ME3s have no rivals.
Quoting SCQ83 (Reply 46):
maybe HAM-BKK and those kind of flights???... probably not even daily). The good thing about EK is that if you want to fly from Hamburg to Bangkok, you got 2 daily HAM-DXB and 4 or 5 daily DXB-BKK... so you can basically tailor your departure and arrival times instead of getting 2 or 3 hypotetical weekly direct flights

+1000

The legacies are focussed on major city links, LHR-BKK, FRA-SIN, CDG-PVG etc. That's understandable because that is where the corporate demand is, and therefore where they can charge premiums up-front to make the routes viable for them.

As you said, though, that ignores all the secondary cities at both ends of the route. Maybe only 1 person wants to fly from HAM to CMB, but that doesn't matter to Emirates. If they can fill HAM-DXB and DXB-CMB they couldn't care less whether the passengers were flying HAM-CHC or CAI-CMB, or whatever.

The euro legacies simply cannot do that. At best HAM-CMB might be able to go 1pw, but realistically that's never going to happen. Offering direct flights often isn't enough if the schedule isn't there to support it.

I think some posters have over-stated the importance of direct flights vs ME3. There are only so many markets that can support long haul non-stop with a competitive schedule.



Quoting YTZ (Reply 40):
For a second, I thought you were talking about Emirates

Me too  
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zkeoj
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RE: LH To Launch A Long Haul Low Cost Carrier?

Thu Mar 28, 2013 4:12 am

Quoting Mortyman (Reply 1):
I'd say: transfer Swiss into a low cost carrier within the next few years. Their 777-300ER can do a very full trunk of people very efficiently!

at 10 abreast in their new 777s  
 
BSLFRA
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RE: LH To Launch A Long Haul Low Cost Carrier?

Fri Mar 29, 2013 8:40 am

I would like to share the opinion of the south indian community living in Germany on this.
So this topic starts with LH going forward with a LCC brand to compete with middle east carrier.

Here we go:
1. We do not fly EK and QR to TRV, COK, MAA, CCJ because it is cheap. Yes of course they have some good prices if you book in advance but also LH has good prices if you book in advance. Just check their cheap fares to the US.

2. We fly EK and QR because they have a brilliant product
-30 KG minimum. If you have frequent flyer status than even more
-LH wants money for second bag. With EK and QR I can take even my iron board. Everything in total should just not exceed minimum of 30 KG
-EK and QR have AVOD. Lufthansa, hello? OK just recently where as EK had AVOD on their old A310 just 15 years ago. Come on Lufthansa, are you sleeping
-EK and QR have plenty of flights a day, a record on time and you get miles for your flight. What do you get from LH for flying with them in cheap Economy booking class. Yes nothing. I have a six digit number on my Golden Miles and More Mastercard but not because of air miles just because I go shopping with that or pay my petrol where as 1EUR = 1 Mile.
-EK and QR are flying to my destination. With LH you can get until BLR and then you have to take a 12 hours bus. With EK and QR it is just starting at your door even if you are not living in Frankfurt. Example fly from Munich, even Dusseldorf wow.

Thats why we are crazy about EK and QR and we really laugh about LH. Yes start a LCC arm but this world is not about LCC only. I also wonder how this will work with high labour cost and missing secondary long haul airports.

just my little 2 cents on this topic