aerogt3
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Why do LCCs have such small market share in Germany?

Mon Nov 06, 2017 5:53 pm

Hello all,

First post here, as I've lurked on here for years, never realizing I could actually post without a paid membership :lol: Following the Lufthansa-AB deal, I've done a lot of searching on the forum about LCCs in Germany, and why they have such little market share - half that of the UK for example. And I can definitely feel it too, as transatlantic and asian fares are always drastically higher from Germany compared to from Spain or France, and my home airport of Stuttgart is a disaster. Probably because 90% of the flights are LH (or AB, Eurowings, Austrian, Swiss, Brussels, Sun Express... I don't have solid data on this, just a guess!). I'm assuming this comes down to Government action in some way, but could also see other factors at play (more distributed population vs. London/UK, etc.) I'm curious, what do people think are the mechanisms for LCCs having such small market share?

For reference, here's an interesting chart I was able to find, showing market share of LCCs for different countries in Europe. I found other similar data, from various different sources but I liked the graphic from this one the best.

Image
Source: http://www.rdcaviation.com/Insights/Art ... enetration

So, what gives? Do Germans just love overpaying (I don't :D)
 
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FabDiva
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Re: Why do LCCs have such small market share in Germany?

Mon Nov 06, 2017 6:37 pm

I believe package holidays are still pretty big in Germany. Hence TUI DE and Condor doing well as the in house airlines of the tour operators.
 
alm1
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Re: Why do LCCs have such small market share in Germany?

Mon Nov 06, 2017 7:35 pm

And the chart is wrong. SAS or even Lufthansa are as much LCC as Latvian airBaltic nowadays. So it shows more which countries carriers are classified as LCC and which are not.
 
smallvoyageur
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Re: Why do LCCs have such small market share in Germany?

Mon Nov 06, 2017 8:04 pm

I am curious about that chart, it puts Luxembourg on the lowest. However, LCCs like U2 and FR hadn't come to LUX airport until a few years ago due to the strength of Luxair. If a Luxembourger wishes to use a LCC, well one of the biggest LCC airports HHN is only a short drive away and FlixBus has regular coach services to Lux-City including the city's bus station and train station from HHN. It is probably the same with Austria, if a Viennese wants to use a LCC, well they are only an hour from BTS in Slovakia making it an alternative to VIE.
 
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ro1960
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Re: Why do LCCs have such small market share in Germany?

Mon Nov 06, 2017 9:49 pm

alm1 wrote:
And the chart is wrong. SAS or even Lufthansa are as much LCC as Latvian airBaltic nowadays. So it shows more which countries carriers are classified as LCC and which are not.


SK and LH are not considered LCCs even if you think so. I think IB could be classified as a LCC but it's not.

The graph shows the market shares between legacy carriers and LCCs per country, regardless of their origin. So for Germany, the 64% or so legacy share is not just LH or the LH group but it includes legacy carriers from other countries like BA, AF, KL, AZ etc. That's how I understand it.
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aerogt3
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 8:58 am

smallvoyageur wrote:
I am curious about that chart, it puts Luxembourg on the lowest. However, LCCs like U2 and FR hadn't come to LUX airport until a few years ago due to the strength of Luxair. If a Luxembourger wishes to use a LCC, well one of the biggest LCC airports HHN is only a short drive away and FlixBus has regular coach services to Lux-City including the city's bus station and train station from HHN. It is probably the same with Austria, if a Viennese wants to use a LCC, well they are only an hour from BTS in Slovakia making it an alternative to VIE.


Well, as I understand the chart, Luxembourg pax who fly through german airports count as german LCC market share.

I know package tour operators do well, but they can't possibly make up the different in market share. The UK has about 50% of its flights through LCC, and Germany less than 25%. Can tour operators really be 25% of the German air market? I can't imagine so, although they're probably a component of it.

So what is the reason then? Is it slot restrictions, favorable treatment towards national carriers, etc.?
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 9:38 am

Could it be that most people living in countries with little LCC competition find local carriers to have a fair enough product at a fair enough price? The non-LCC airlines in Europe have collectively several hundred million passengers every year - they wouldn't have that if their air fares were "exorbitantly high" as so many here put it...

LCCs bring out the worst in people - I work for a large LCC and every week we have passengers who bitch and complain about having to pay for coffee onboard, think they are entitled to bring everything they own into the cabin and actually shout "THERE IS NO LEGROOM!!!". Paying more than 29 Euro for a four-hour flight across Europe is unacceptable to them, but buying duty free sigarettes and booze for 200 Euro is their birth right.
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VSMUT
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 10:58 am

Domestically, trains and cars give strong competition to air transport.

On international flights, you have the above-mentioned package holidays, and I also find that these days legacy airlines such as Lufthansa, Air France, KLM, Austrian etc. are just as competitive on price as low cost airlines. You might not be able to find really cheap tickets on all flights, but LCCs rarely operate daily or multiple daily flights either. Worst case, I will have to pay 10 eur more, but then I have a suitcase included, which the LCCs won't.

Germans also drive a lot, even when going on holidays in places like Spain and Italy.

aerogt3 wrote:
Can tour operators really be 25% of the German air market? I can't imagine so, although they're probably a component of it.


A quick and rough count shows that the dedicated charter fleet in Germany makes up about 24% of the German passenger carrying airliner fleet. A significant proportion of the non-charter fleet is Lufthansa's long haul fleet which might not carry a single German passenger, but only passengers connecting through Frankfurt or Munich. Air Berlin used to operate dedicated charter flights too, and I think Eurowings does a little bit too, and I didn't include them in the 24%.
 
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LTU330
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 11:06 am

The main reason I would guess is that if you want to have a base in Germany, you have to abide by their employment laws, and the likes of Ryanair won’t be interested to pay the staff a living wage that reflects the money required to actually be able to live in Germany near to an Airport.
 
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 11:10 am

Simple reason. No working German LCC and government protectionism of LH.
 
PanHAM
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 11:21 am

Low cost does not always mean low fares. LH still offers €99 return fares with alll the Basics while prebooking at FR often results in € 200 plus Basic fares from FRA.
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:05 pm

seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


Yawn.
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steman
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:14 pm

It could also be that Countries where LCC have a larger quote of the markets have weaker national (legacy) carriers, whereas in Germany Lufthansa is very strong and established. I am thinking of Italy, where Ryanair is actually the biggest domestic airline, also thanks to the intrinsic weakness of Alitalia. Does the chart consider Eurowings/Germanwings as LCC or as part of a Legacy group. In the past few years, with the shift of domestic and international routes that do not pass through MUC and FRA to Germanwings/Eurowings, these have grown a lot and represent a big chunk of the German market. Ryanair has grown a lot in Berlin and U2 is expected to fill part of the void left by air berlin so this chart might soon be outdated.
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:32 pm

I'm not sure I buy entirely into the premise of this thread but lets assume that it is true. I can think of a couple of reasons why that is. First, LH is a very well run airline. I remember way back, LH adjusting they business model to compete with LCC's when they first started to expand in Europe. So by offering customers similar fares, LH has kept the German market less appealing to LCC's. I also suspect that cost wise, Germany is an expensive place for a business to operate. Second, Germany's privileged geographic position in the center of Europe means that you're never too far away, either by car or HSR, from some of the most popular destinations outside of Germany, or between major German cities.
 
steman
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:45 pm

On top of what airbazar has said,
in Germany there is still a tax on air transport on top of all other taxes applied on a ticket and this might make more difficult for LCC to keep their fares low enough to be competitive with the likes of LH
 
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:48 pm

WIederling wrote:
seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


Yawn.


You do not need to yawn. The AB insolvency has again shown that this is true. And it is the same with the really the aggressive stance on the Irish contracts for FR crews based in Germany.

Also Germany had 2 large airlines until a few weeks ago, both controlled the 4 biggest airports between them and offered nearly all connections with reasonable demand, but also controlled many of the good slots at the airports. LCC only had access to smaller secondary or tertiary airports, which often have a less attractive catchment area and or have worse traffic connections. (Weeze / Hahn).
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:52 pm

steman wrote:
On top of what airbazar has said,
in Germany there is still a tax on air transport on top of all other taxes applied on a ticket and this might make more difficult for LCC to keep their fares low enough to be competitive with the likes of LH


_Not dependent on the ticket price_

This softens the advantage of the LCC ticket price.

And last time I flew with RY the base offer bloomed up quite nicely for check out and paying.
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WIederling
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 12:55 pm

seahawk wrote:
WIederling wrote:
seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


Yawn.


You do not need to yawn. The AB insolvency has again shown that this is true. And it is the same with the really the aggressive stance on the Irish contracts for FR crews based in Germany.


Yawn again. this is so tiring to repeat:
"competitors" that compete by making losses or breaking employment regulation are a distortion and not true competition.
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SuperTwin
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 3:36 pm

VSMUT wrote:
Domestically, trains and cars give strong competition to air transport.

On international flights, you have the above-mentioned package holidays, and I also find that these days legacy airlines such as Lufthansa, Air France, KLM, Austrian etc. are just as competitive on price as low cost airlines. You might not be able to find really cheap tickets on all flights, but LCCs rarely operate daily or multiple daily flights either. Worst case, I will have to pay 10 eur more, but then I have a suitcase included, which the LCCs won't.

Germans also drive a lot, even when going on holidays in places like Spain and Italy.


That is about as good an answer as you need on this.

Looks to me like a well-developed rail network and the presence of HSR works against the LCC market.

Am I right in thinking that the Legacies with biz class are less affected due to loyalty programs? Ie. Fly with us domestically (HAM-FRA) and accrue points for your long haul trips. Seems like the obvious draw that air has over rail in the context of business travel.
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 3:46 pm

There is another problem with the chart i am pretty sure AB is a part of the non LCC. I am aware that AB was not a LCC but most called it a "hybrid", so they took a lot of decentralised german city pairs with there bases all over the country.

Back in the old days "Deutsche British Airways" tried to get some inner german market share and they did, but the could not compete with LH. LH started lowering prices until DBA was gone. LH is a very strong competitor, they actually did not fight air berlin to heavy because air berlin was all the time a shield for LCC&ULCC, but thats gone so EW needs to defends marketshare vs Easyjet, Wizz and Ryan Air.
 
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ro1960
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 4:19 pm

SuperTwin wrote:
VSMUT wrote:
Domestically, trains and cars give strong competition to air transport.

On international flights, you have the above-mentioned package holidays, and I also find that these days legacy airlines such as Lufthansa, Air France, KLM, Austrian etc. are just as competitive on price as low cost airlines. You might not be able to find really cheap tickets on all flights, but LCCs rarely operate daily or multiple daily flights either. Worst case, I will have to pay 10 eur more, but then I have a suitcase included, which the LCCs won't.

Germans also drive a lot, even when going on holidays in places like Spain and Italy.


That is about as good an answer as you need on this.

Looks to me like a well-developed rail network and the presence of HSR works against the LCC market.


If you only consider domestic market. Train and road are not always competitive pricewise against LCC or even legacies for out of country trips. Driving maybe as the cost can be split by the number of passengers in the vehicle and if time is not an issue. Rail and specially HSR tend to be more expensive than flying. Maybe because they offer a journey duration advantage on short distances.
Last edited by ro1960 on Tue Nov 07, 2017 4:29 pm, edited 1 time in total.
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 4:26 pm

WIederling wrote:
seahawk wrote:
WIederling wrote:

Yawn.


You do not need to yawn. The AB insolvency has again shown that this is true. And it is the same with the really the aggressive stance on the Irish contracts for FR crews based in Germany.


Yawn again. this is so tiring to repeat:
"competitors" that compete by making losses or breaking employment regulation are a distortion and not true competition.


It does not matter, but this policy limited the growth of FR. You might like it, I do not, but it does not change the fact that this was a key point for FR being very careful about bases in Germany.
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 4:32 pm

Well, it looks like that is going to change a bit soon with U2 taking over some of the AB operation out of TXL at least. I don´t know if they will try DUS too.
Also FR going to increase their presence at FRA next year.
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 4:36 pm

I imagine there are several reasons:

- Low-cost were almost absent from FRA and MUC (Germany's two largest airports) until very recently. Now this is changing with FR in FRA.

- Germans are still quite loyal to Condor and the likes for their trips to the sun. In the UK, British have long ago moved to FR/U2 (see Monarch's fate).

- Distances in domestic travel in Germany are not that long and expensive (taxes) so low-cost are almost absent. In Spain or France (bigger countries with bigger distances) low-costs have plenty of domestic routes.

But I see at least the two first points changing quickly. Ryanair starting plenty of sun routes out of FRA is a good proxy.
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 4:45 pm

Does the chart include connecting flights? If so, that’s probably a big contributor factor since a Frankfurt is a massive hub. I’m currently in Frankfurt as a connection between DEL and GRU. I would say a considerable percent of traffic to and from Germany is connecting traffic, which is not exactly the low cost model.

Coupled with other factors that have been mentioned above and you have lots of reasons for the disparity.
 
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PatrickZ80
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 8:55 pm

seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


Maybe no LCC flying under a German flag, but plenty of foreign LCCs flying from Germany. However the legacy airlines always had a very strong market position in Germany and the LCCs only had the leftovers. For a long time the big airports were basically off-limits to the LCCs so they had to stick to the smaller ones. Only recently this has changed.

As a matter of fact, just today I've landed in Germany on an LCC, more precisely at Weeze on Ryanair.
 
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Re: Why do LCCs have such small market share in Germany?

Tue Nov 07, 2017 11:21 pm

ro1960 wrote:
If you only consider domestic market. Train and road are not always competitive pricewise against LCC or even legacies for out of country trips. Driving maybe as the cost can be split by the number of passengers in the vehicle and if time is not an issue. Rail and specially HSR tend to be more expensive than flying. Maybe because they offer a journey duration advantage on short distances.


More expensive?!? Thats absolutely not my experience. Rail, even on the ICE or TGV in 1st class is always 50% cheaper that the cheapest flights I can find. that goes for both domestic and international services. You also have the Bahncard discounts cards, and it doesn't take much for those to pay themselves off, making fares even lower.

SCQ83 wrote:
- Distances in domestic travel in Germany are not that long and expensive (taxes) so low-cost are almost absent. In Spain or France (bigger countries with bigger distances) low-costs have plenty of domestic routes.


Germany, France and Spain are physically almost exactly the same size. One would expect Germany to lend itself better for domestic LCC flights due to the decentralized nature of the country. In France and Spain almost everything revolves around Paris/Madrid, while in Germany you have some 10 separate and massive metropolitan areas (depending on how you count), which ultimately means a significantly greater potential for the LCCs. Germans are more likely to travel from one extreme end of the country to the other than the French or Spaniards are.
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 2:43 am

VSMUT wrote:
Germany, France and Spain are physically almost exactly the same size. One would expect Germany to lend itself better for domestic LCC flights due to the decentralized nature of the country. In France and Spain almost everything revolves around Paris/Madrid, while in Germany you have some 10 separate and massive metropolitan areas (depending on how you count), which ultimately means a significantly greater potential for the LCCs. Germans are more likely to travel from one extreme end of the country to the other than the French or Spaniards are.


France 551,394 sqkm
Spain 498,468 sqkm
Germany 357,168 sqkm

That is not including DOMs or the Canary Islands. So Germany is substantially smaller.

Now regarding your point about domestic travel patterns, the reality is completely the opposite of what you mention.

1. In Germany (already being smaller) as you mention population is "well distributed" with 7 main cities dotting the whole country. That means that for a lot of city pairs, air travel is completely uncompetitive (short distance) or train is already quite competitive. Look at HAM-MUC (probably longest "big" city pair), it is 601 km by air.

2. In Spain population lives in Madrid or around the coast, and then you have the islands. That means:

- Mainland Spain - Islands which are short flights (e.g. MAD-PMI 1 hour) where car is not competitive = a low-cost carrier dream. MAD-PMI is 1.6m, MAD-LPA 1.5m PAX, etc. A lot of passengers. You have many flights from PMI or LPA to anywhere in mainland Spain (e.g. SCQ-PMI has 4 carriers!)

- Anything that does not involve MAD (and again, almost everybody lives in the coast except those living in Madrid), is about +1000 km by car. That is why from BCN you have Ryanair/Vueling to almost everywhere: BIO, SDR, OVD, LCG, SCQ, VGO, VLL, XRY, SVQ, ALC, VLC, AGP, LEI, GRX, etc. For instance, SCQ-BCN is 886 km by air; substantially longer than that the HAM-MUC I mentioned before. And then you have many other busy North-South combinations (e.g. SCQ/BIO/OVD/SDR-ALC/VLC/SVQ/AGP) not involving Barcelona where train is not competitive.

3. In France population is concentrated on the South (from Bordeaux to Nice) and then the North (Paris / Lille). That means again there are a number of South-North/Paris routes where TGV is still not competitive. E.g. LIL-MRS is 809 km by air; CDG-NCE is 694 km; longer than HAM-MUC. Also West-East communications are not good meaning low cost are competitive there too. And a BOD-NCE is 647 km by air; already longer than MUC-HAM.

And then Italy has certain similarities to Spain and France. A lot of island travel (Sicily and Sardinia are very populated) and North-South connections; anything North-South that does not involve Rome is competitive by plane.
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 3:06 am

Has anyone ever analysed the impact of not having to make reservations in long-distance trains in Germany to domestic flights in the country?
 
LH982
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 5:25 am

For Stuttgart it would be great to have FR or U2 with multiple dailies to Hamburg, Berlin and Vienna. These are the type of routes that have plenty of volume and need some competition.

I agree that LCCs are not the answer to everything. If you leave Ryanair with a monopoly on a busy route, they are just as capable of ramping up prices as Lufthansa. It's the competition we need.
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 9:09 am

But multiple flights between biz centres is not the waqy FR works. That would Need scheduling at the passengers convenience. FR schedules however only at their convenience, strictly no overnights, same day Returns almost impossible. Procedures add too much time consuming and adding to total travel times. The big places / City pairs have hourly and more flights not only on LH but on German rail as well. Rail even offers last Minute jump on a Train and you can buy your ticket on a smart phone app after you just catched the Train.

FR had the Chance to establish one or two domestic routes based on their new FRA Slots, they passed the Chance. From what I hear, their Prices in FRA are not that exciting either, ofte 10 times of what they collect at HHN.
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 9:45 am

PanHAM wrote:
But multiple flights between biz centres is not the waqy FR works. That would Need scheduling at the passengers convenience. FR schedules however only at their convenience, strictly no overnights, same day Returns almost impossible.


That is quite old fashioned thinking now. They have intentionally created business day return flights on a good number of city pairs that requires them. In fact, more business-focused schedules are a part of uts always getting better programme, where it makes sense.

If FR thought it made sense here, they'd do it. Hence 5x daily FCO-PMO, 4x daily BGY-NAP, 6x daily FCO-CTA, BCN-PMI 4x daily, DUB-AMS 4x daily, lots from the UK to Ireland, STN-GLA/EDI 4x daily (but stopped now), and many, many others.
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 12:48 pm

As Pearson said, FR are already doing this elsewhere and have been for years.

There's also no need to overnight an aircraft. LH, KL and AF do this, but mainly to pick up connecting traffic. Nobody really needs a 5.15am flight from Dublin to Frankfurt, if their final destination is Frankfurt.
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 1:21 pm

As I already said, FR had the chance to establish that in Germany. They backed off although they bigmouthed on the usual way. The German market is different than any other European market and here FR has not only to compete with LH but with DB as well. Their System may work at HHN and Weeze but not in Frankfurt.
BTW; I did take a lot of early morning LH flights, that put me into FRA between 8 an 9 am, IIRC even from DUB
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LH982
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 1:29 pm

LH moved the flight from 5.55 to 5.15. I don't for a second believe this was because people needed to be in Frankfurt 40 minutes earlier.

The examples I gave were STR to VIE, BER and HAM. DB are not a valid competitor on any of these and all three are now Lufthansa monopoly routes. I don't really care if it's Wizz, Easy Ryanair or Vueling, but they need some competition.
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 3:45 pm

LTU330 wrote:
The main reason I would guess is that if you want to have a base in Germany, you have to abide by their employment laws, and the likes of Ryanair won’t be interested to pay the staff a living wage that reflects the money required to actually be able to live in Germany near to an Airport.


But are German employment laws specifically difficult? They don't seem to hinder other sectors, I don't see why they would hinder a LCC. I believe Germany has no minimum wage, for example. I haven't researched enough to prove it, but it doesn't seem that German labor costs for example are so out of line with France or the UK, and I feel they are definitely lower than the Netherlands. Yet all three of these countries have double the LCC penetration of Germany.

VSMUT wrote:
Domestically, trains and cars give strong competition to air transport.... Germans also drive a lot, even when going on holidays in places like Spain and Italy.


That might explain why air travel is a smaller share of travel in general (via all modes), but it doesn't explain why only 25% of German air travelers fly with a LCC. Additionally, France and Spain have much larger HSR systems (despite much smaller populations), so I feel like this isn't a valid point regardless.

seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


I don't disagree with you, and in fact I tend to think you're probably right, but can you elaborate? I can see protectionism of LH via them getting all the good airport slots as a possibility, but what else does the German government do to protect them?

At Stuttgart airport, for example, there are hardly any LCC flights, and between Swiss, Austrian, LH/AB, Eurowings, Sunexpress (all one group), I feel like that's the overwhelming majority of flights. There's 5 easyJet flights and 2 Ryanair. No presence from Norwegian. In Spain, it's hard to find any airport with such low LCC presence. Spain, France, UK all have intercontinental long haul via numerous airlines, but Germany doesn't have anything but Condor. It seems strange that LCC penetration is so low, there has to be some barrier to it.

For example, where's Norwegian? Seems they offer more A320 flights in North America than in Germany!
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 4:31 pm

aerogt3 wrote:
LTU330 wrote:
The main reason I would guess is that if you want to have a base in Germany, you have to abide by their employment laws, and the likes of Ryanair won’t be interested to pay the staff a living wage that reflects the money required to actually be able to live in Germany near to an Airport.


But are German employment laws specifically difficult? They don't seem to hinder other sectors, I don't see why they would hinder a LCC. I believe Germany has no minimum wage, for example. I haven't researched enough to prove it, but it doesn't seem that German labor costs for example are so out of line with France or the UK, and I feel they are definitely lower than the Netherlands. Yet all three of these countries have double the LCC penetration of Germany.

VSMUT wrote:
Domestically, trains and cars give strong competition to air transport.... Germans also drive a lot, even when going on holidays in places like Spain and Italy.


That might explain why air travel is a smaller share of travel in general (via all modes), but it doesn't explain why only 25% of German air travelers fly with a LCC. Additionally, France and Spain have much larger HSR systems (despite much smaller populations), so I feel like this isn't a valid point regardless.

seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


I don't disagree with you, and in fact I tend to think you're probably right, but can you elaborate? I can see protectionism of LH via them getting all the good airport slots as a possibility, but what else does the German government do to protect them?

At Stuttgart airport, for example, there are hardly any LCC flights, and between Swiss, Austrian, LH/AB, Eurowings, Sunexpress (all one group), I feel like that's the overwhelming majority of flights. There's 5 easyJet flights and 2 Ryanair. No presence from Norwegian. In Spain, it's hard to find any airport with such low LCC presence. Spain, France, UK all have intercontinental long haul via numerous airlines, but Germany doesn't have anything but Condor. It seems strange that LCC penetration is so low, there has to be some barrier to it.

For example, where's Norwegian? Seems they offer more A320 flights in North America than in Germany!


What does make a difference is that in both France and spain all major highways are toll highways, you pay to use them. This is not the case in Germany, where they're free to use. You can drive from Hamburg to Munich and other than fuel it doesn't cost you anything. That's the main reason long-distance driving is more popular in Germany than it is in France or Spain.

As for labor costs, I believe Ryanair pays all of it's employees by the Irish law regardless of where they're based. Only France doesn't allow for that, that's the reason Ryanair doesn't have any bases in France. All flights to France are operated from the other end.

No presence from Norwegian doesn't mean anything by the way, there are lots of places Norwegian doesn't cover. Like for example they don't fly to Belgium and their presence in the Netherlands is also very limited with only a few flights to Amsterdam. You'd think they could cover far more, but they don't.

But it's hard for LCCs to gain market share in Germany. Transavia tried this with their hub in Munich and failed.
 
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 4:32 pm

aerogt3 wrote:
seahawk wrote:
Simple reason. No working German LCC and government protectionism of LH.


I don't disagree with you, and in fact I tend to think you're probably right, but can you elaborate? I can see protectionism of LH via them getting all the good airport slots as a possibility, but what else does the German government do to protect them?

At Stuttgart airport, for example, there are hardly any LCC flights, and between Swiss, Austrian, LH/AB, Eurowings, Sunexpress (all one group), I feel like that's the overwhelming majority of flights. There's 5 easyJet flights and 2 Ryanair. No presence from Norwegian. In Spain, it's hard to find any airport with such low LCC presence. Spain, France, UK all have intercontinental long haul via numerous airlines, but Germany doesn't have anything but Condor. It seems strange that LCC penetration is so low, there has to be some barrier to it.

For example, where's Norwegian? Seems they offer more A320 flights in North America than in Germany!


Well there are a number of things that helped LH.

1. many airports are slot restricted and apart from BER all airports which got extra capacity are LH hubs
2. there was (and is) some serious pressure on FR bases and their social security payments
3. airports used by FR and have plenty slots suffer from a bad connection to public transport (because of which FR also pays very low fees)
4, the way the insolvency of AB was handled

In addition

- the 4 big airports are all strongly slot restricted and had (or have) a strong home carrier
- the holiday carriers are strong Sunexpress, Condor, TUI, Germania
- at least 6 airports are slot restricted at peak hours
- the DB network is strong and works okayish
- driving by car is popular
- not many underserved catchment areas

and most importantly the LH never abandoned point-to-point connection from non-hubs. You never had to fly DUS-FRA-BER or MUC-FRA-HAM. In the UK or in Spain such connections were (are) much more common by the dominating legacy carrier.

CGN shows that LCC works in Germany, if you have the right circumstances.
 
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 4:42 pm

One reason, if the chart is correct, is that Germany's central location makes car travel to big tourist destinations like IT, FR, ES and other countries pretty easy. Not such am easy deal from the UK or the eastern Euro countries.
 
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ro1960
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Re: Why do LCCs have such small market share in Germany?

Wed Nov 08, 2017 8:37 pm

sgbroimp wrote:
One reason, if the chart is correct, is that Germany's central location makes car travel to big tourist destinations like IT, FR, ES and other countries pretty easy. Not such am easy deal from the UK or the eastern Euro countries.


Traffic on the chart is not just about German residents it also includes traffic with people from other countries flying to Germany! So this statement is not very valid.
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 7:39 am

And regarding the government sceptical position towards Ryanair, they are proven right again.

http://www.airliners.de/abfertiger-fran ... ign=buffer

the ground handling partner of FR at FRA opened a new subsidiary specially for FR and this subsidiary is paying wages below the labour agreement. And in the end it is the same trick that FR uses, the workers have a contract with the a temporary employment company which then sends the workers to the Spanish part of Aconia, which then subcontracts to the German subsidiary and handles the FR traffic.
 
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 8:34 am

seahawk wrote:
It does not matter, but this policy limited the growth of FR. You might like it, I do not, but it does not change the fact that this was a key point for FR being very careful about bases in Germany.


I'd imagine. FR model of "employment" is illegal here. With rather well founded reasoning.
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PanHAM
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 9:03 am

Their employment construct for the pilots is under Investigation and it is safe to say that the present set-up (pilots are self employed) will not hold up. Now they get bad press for under paying ramp workers. Plus, they are on the manure list because they are leading the list of "late-comers) at FRA. Meaning, they land more often after 11pm than all other carriers, Finally, they are not really cheap, low cost yes, low fares no. At least not at FRA.
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 9:51 am

WIederling wrote:
seahawk wrote:
It does not matter, but this policy limited the growth of FR. You might like it, I do not, but it does not change the fact that this was a key point for FR being very careful about bases in Germany.


I'd imagine. FR model of "employment" is illegal here. With rather well founded reasoning.


Do not get me wrong. I think the model is very dubious, but German authorities showed a much stronger interest in the legality of the system than Spanish or British, which made Germany less attractive for FR.
 
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 10:18 am

PanHAM wrote:
Finally, they are not really cheap, low cost yes, low fares no. At least not at FRA.


That's because landing fees in Frankfurt are very expensive, which is also a way of protecting Lufthansa. Sure Lufthansa pays those same expensive landing fees, but they are a full-service airline so to them it matters less. High landing fees are a way to keep the differences small. Compare this to Frankfurt-Hahn which has much lower landing fees. Because of that Ryanair can fly really cheap from there, much cheaper than they can out of Frankfurt intl.
 
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 10:23 am

Their system-wide average fare, including ancillaries, was about €55 one-way – with an average sector length of 762 miles - in their latest financial year (source: their annual report). That is very inexpensive. And if they’re more expensive in FRA than elsewhere, that’s simply as the market can accept that pricing – or they’d not do it. I randomly looked at prices for the next couple of months on different city-pairs across their countries from FRA. I spent a few minutes doing it. FR was at least 100% cheaper than the next cheapest non-stop option on a lot of occasions. And of course there were quickly findable very cheap deals. MAD for €30 return? PMI for €34? STN for €20? LPA for €58? LIS for €34? ATH for €40? And so on with little effort.
There are some extraordinary deals.

On the one hand, you previously said they don’t offer enough business daytrip-friendly schedules, but they do when they need to. On the other hand, you say that their fares from FRA aren’t cheap enough.

Evidently FR knows what they’re doing – for their targeted segments – or they’ll change it.
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aerogt3
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 11:22 am

I would write off the effect of trains as other high LCC market share countries have much more expansive rail networks despite smaller populations.

But I really don't get the car comments. Yes, Germans drive cars more. But that means less flying generally; it doesn't explain the LCC market share. If Germany's LCC market share were to increase to say, the UK's, it would need to go from 25% to 50%. According to my math, it would mean drivers would need to ditch their cars and fly ONLY on LCCs, in a number equal to 50% of the current total air traffic, in order for Germany to have LCC market share parity with Spain or the UK.

I have a hard time believing that 1/3 of the theoretical pax capacity of Germany have chosen to drive, and that all of these customers are what would be LCC customers (no legacy "defectors".) I think it's got to be slot restrictions, LH deals like AB buyout, and labor deterrents (like forcing Irish contracted crews to be based in Ireland.)
 
VSMUT
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 11:26 am

SCQ83 wrote:
In France population is concentrated on the South (from Bordeaux to Nice) and then the North (Paris / Lille). That means again there are a number of South-North/Paris routes where TGV is still not competitive. E.g. LIL-MRS is 809 km by air; CDG-NCE is 694 km; longer than HAM-MUC. Also West-East communications are not good meaning low cost are competitive there too. And a BOD-NCE is 647 km by air; already longer than MUC-HAM.


Except for the fact that people don't travel from Bordeaux to Nice anywhere near as much as people travel from Stuttgart to Bremen, Düsseldorf to München and so on. A disproportionate amount of government institutions and business are centralized in Paris and Madrid, not so in Germany. People travel more according to the hub and spoke model in Spain and France, a model that favours legacy airlines. People in Bordeaux generally don't travel to Nice or Lyon in the same way people from Nürnberg travel to pretty much every major city in Germany. German travel patterns favour the point to point model traditionally used by the low cost airlines.
 
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 11:30 am

aerogt3 wrote:
Hello all,

First post here, as I've lurked on here for years, never realizing I could actually post without a paid membership :lol: Following the Lufthansa-AB deal, I've done a lot of searching on the forum about LCCs in Germany, and why they have such little market share - half that of the UK for example. And I can definitely feel it too, as transatlantic and asian fares are always drastically higher from Germany compared to from Spain or France, and my home airport of Stuttgart is a disaster. Probably because 90% of the flights are LH (or AB, Eurowings, Austrian, Swiss, Brussels, Sun Express... I don't have solid data on this, just a guess!). I'm assuming this comes down to Government action in some way, but could also see other factors at play (more distributed population vs. London/UK, etc.) I'm curious, what do people think are the mechanisms for LCCs having such small market share?

For reference, here's an interesting chart I was able to find, showing market share of LCCs for different countries in Europe. I found other similar data, from various different sources but I liked the graphic from this one the best.

Image
Source: http://www.rdcaviation.com/Insights/Art ... enetration

So, what gives? Do Germans just love overpaying (I don't :D)


I think the reason is relative simple. When the LCCs started growing (first FR and U2, later DY, Wizz and who else there is), Germanys aviation market was highly saturated. LH wasn't alone back then.

We had LH, AB, LTU, dba, TUIfly, Germania, Condor (Thomas Cook). Later AB grew much stronger, also in the domestic market after they bought LTU, dba and TUIfly (plus Belair and Niki in CH and AT). For a short while they even matched LHs FRA-TXL shuttle. So you also had a lot of competition in this market.

Now, after AB is gone, there are just LH, Condor and Germania left. I assume this will open up many opportunities for LCCs to dip into the German(-speaking) market. Interesting times ahead...
 
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seahawk
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Re: Why do LCCs have such small market share in Germany?

Thu Nov 09, 2017 11:49 am

VSMUT wrote:
SCQ83 wrote:
In France population is concentrated on the South (from Bordeaux to Nice) and then the North (Paris / Lille). That means again there are a number of South-North/Paris routes where TGV is still not competitive. E.g. LIL-MRS is 809 km by air; CDG-NCE is 694 km; longer than HAM-MUC. Also West-East communications are not good meaning low cost are competitive there too. And a BOD-NCE is 647 km by air; already longer than MUC-HAM.


Except for the fact that people don't travel from Bordeaux to Nice anywhere near as much as people travel from Stuttgart to Bremen, Düsseldorf to München and so on. A disproportionate amount of government institutions and business are centralized in Paris and Madrid, not so in Germany. People travel more according to the hub and spoke model in Spain and France, a model that favours legacy airlines. People in Bordeaux generally don't travel to Nice or Lyon in the same way people from Nürnberg travel to pretty much every major city in Germany. German travel patterns favour the point to point model traditionally used by the low cost airlines.


You do not understand the German system. it is unlikely that you would travel from MUC to BRE for a government institution, as either you would have one in Bavaria or you would need to travel to Berlin (or Bonn in a few cases). But due to the federal nature, it is very rare that you need to leave your local state for any government contact.

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