Any thoughts on Lufthansa trying to create an empire of airlines in Europe? They are trying to get into a commercial agreement with Alitalia recently but no plans of investing with the carrier. Surely this goes against competition law as most airlines in the EU are pretty much owned or part of the LH group.

Are we forgetting AF, KL, BA, IB, SK, AY, EI, TP, FR, U2, W6, and DY among others?

Don’t see how it’s any different from IAG, just that their name isn’t associated with a certain airline.

There's far more than the Lufthansa Group in Europe. IAG and AF-KL are similar constructions and there are dozens of airlines that are independent from those big three even though many are connected through the alliances. I'd say we are far away from a monopoly and that there is actually much more competition today than there was a few decades ago.

J343 wrote:

Any thoughts on Lufthansa trying to create an empire of airlines in Europe? They are trying to get into a commercial agreement with Alitalia recently but no plans of investing with the carrier. Surely this goes against competition law as most airlines in the EU are pretty much owned or part of the LH group.

Isn't everyone trying to create an empire? It's a competitive industry in Europe, try FR $19 flights across the continent. NK won't match that stateside. Constructs like EW or the current iteration of SN didn't come about by accident. Same can be said for outfits like Level and JN. It's always vis-a-vis the competition from W6, U2, DY, you name it. Smaller flag carriers like CZ or RO are reduced to niche players in an alliance and might eventually go the way of MA, unless they get very creative. Shirley says Europe is a text book case of competition.

CZ is China Southern Airways, I'm assuming you meant CSA Czech Airlines whose code is OK.

CSA Czech Airlines is 97.74% owned by Travel Service the parent owner of Smartwings.

CSA is also the worlds fifth oldest airline still in operation and with the recent investment in Smartwings we may well even see the two airlines being merged in the future and forming one larger airline.

Although in writing that I don't actually see where CSA currently sits on the European aviation map as WIZZAIR are strong competition and the Smartwings brand isn't really well known outside it's core Czech home market.

J343 wrote:

Any thoughts on Lufthansa trying to create an empire of airlines in Europe?

...have more thoughts about you not understanding the meaning of the word "monopolize."

While that does tend to be rather common on this site-- when you have multiple competitors in a marketplace, at least two of which are just as powerful/penetrating as you; then that market is about the furthest thing from a "monopoly" as is factually possible.

It is quite natural that in a unifying Europe with a unified aviation market there is a super national consolidation and that the players of the key countries play a pivotal role in that. It could very well be that in a few years there will be only 4 players left in Europe (excluding Russia, which has its own dynamics):
1. LH
2. IAG
3. AF/KL
4. TK
plus maybe an FR and a U2 or the combination of these 2 and a few niche players. I could even see a hook up among these 4, I.e LH/AF OR LH/TK.

For a market of around 500+ million this is still more competitive than the North America with a similar number of people and players, which is in generally speaking quite competitive.

LAX772LR wrote:

J343 wrote:

Any thoughts on Lufthansa trying to create an empire of airlines in Europe?

...have more thoughts about you not understanding the meaning of the word "monopolize."

While that does tend to be rather common on this site-- when you have multiple competitors in a marketplace, at least two of which are just as powerful/penetrating as you; then that market is about the furthest thing from a "monopoly" as is factually possible.

As everyone probably knows, the Herfindahl–Hirschman Index is a useful measure for market concentration and objectively measures whether a monopoly is forming. Using some back-of-the-envelope figures from 2017, the European major carriers have an HHI of 850 on a scale of 0 to 10,000. According to Wikipedia, anything below 1,500 is generally considered "not concentrated." If LH was approved to acquire Alitalia, that would change to 915. So, still not a risk for monopoly.

ikolkyo wrote:

Don’t see how it’s any different from IAG, just that their name isn’t associated with a certain airline.

I think this is where the perception of LF monopolizing the continent come from. LX, OS, and SN all subsumed into the LH hierarchy. It seems less like the union of separate companies I think of when IAG or AF-KLM group come up.

What's the intra-Germany competitive landscape look like now with AB gone? That seems like a much bigger monopoly concern for consumers than the wider European market.

IAG was pretty much an acquisition of IB by BA, only the legal framework appears to indicate a merger of equals.

LH is naturally playing a key role in the European consolidation. Anything else would be quite surprising. There is however enough competition in Europe so that one cannot speak of “Lufthansa monopolizing Europe”.

LH Group is nowhere close to a monopoly in Europe. If you want to see some actual monopolies in action pop over here to Canada.

YOWza

They will buy SAS and AZ and TAP and LOT and Aegean and BA will buy Norwegian and then it will be all over for AFKL. Maybe they can get Air Europa in the meanwhile.

Back in 2005, my dear Professor in Aviation studies said that in the future, in some form or other, only three "legacy carriers" will remain in Europe.

Lufthansa,. British Airways and Air France.

I am beginning to think he was and will be right.

Although i have been involved with the European airline industry in a senior capacity for more than 30 years i do not understand this thread. By far the largest European airline in terms of pax numbers is FR, currently carrying around 140 million pax per year. It also has the strongest profitability record and the strongest balance sheet. It has ordered sufficient aircraft to grow to 200 million anual pax by 2024. U2 is carrying around 80 million per year. Current industry wisdom is that there will be European consolidation and that FR and U2 will be leading participants in the surviving 5 large groupings. Others will be LH group, AF/KL and IAG. with this scenario thete is no way that there can be any thoughts about LH domination. It will be fighting intense competition at every stage.

amadorE175 wrote:

ikolkyo wrote:

Don’t see how it’s any different from IAG, just that their name isn’t associated with a certain airline.

I think this is where the perception of LF monopolizing the continent come from. LX, OS, and SN all subsumed into the LH hierarchy. It seems less like the union of separate companies I think of when IAG or AF-KLM group come up.

What's the intra-Germany competitive landscape look like now with AB gone? That seems like a much bigger monopoly concern for consumers than the wider European market.

This is exactly what I meant. Maybe I used the word monopoly in the wrong context but the LH group seems to be absorbing the smaller European carriers. Of course we have IAG and AF-KLM. Obviously there are others that aren't part of the 3 just yet i.e Finnair, SAS, Air Europa, Alitalia, Air Italy to name a few. But with the recent news of LH wanting extensive cooperation with Alitalia (which could potentially turn into acquisition) then perhaps there is a risk (or small) of monopoly or leaving little room for competion. IAG wants to buy Norwegian, potentially Finnair (no speculation yet but suspecting) then there will potentially be no room for competition.

amadorE175 wrote:

ikolkyo wrote:

Don’t see how it’s any different from IAG, just that their name isn’t associated with a certain airline.

I think this is where the perception of LF monopolizing the continent come from. LX, OS, and SN all subsumed into the LH hierarchy. It seems less like the union of separate companies I think of when IAG or AF-KLM group come up.

What's the intra-Germany competitive landscape look like now with AB gone? That seems like a much bigger monopoly concern for consumers than the wider European market.

This is exactly what I meant. Maybe I used the word monopoly in the wrong context but the LH group seems to be absorbing the smaller European carriers. Of course we have IAG and AF-KLM. Obviously there are others that aren't part of the 3 just yet i.e Finnair, SAS, Air Europa, Alitalia, Air Italy to name a few. But with the recent news of LH wanting extensive cooperation with Alitalia (which could potentially turn into acquisition) then perhaps there is a risk (or small) of monopoly or leaving little room for competion. IAG wants to buy Norwegian, potentially Finnair (no speculation yet but suspecting) then there will potentially be no room for competition.

amadorE175 wrote:

ikolkyo wrote:

Don’t see how it’s any different from IAG, just that their name isn’t associated with a certain airline.

I think this is where the perception of LF monopolizing the continent come from. LX, OS, and SN all subsumed into the LH hierarchy. It seems less like the union of separate companies I think of when IAG or AF-KLM group come up.

What's the intra-Germany competitive landscape look like now with AB gone? That seems like a much bigger monopoly concern for consumers than the wider European market.

That's the real concern! I understand LH has a 90% market share in the country, which is the biggest economy in Europe. I believe LH drives higher prices in the intra-Germany market and in the long-haul market due to the this monopoly situation. German consumers are paying the price for it.

For example, Norwegian long haul has entered other major European countries like UK, France, Spain, and the Nordics. But for whatever reason they haven't entered Germany.

Lufthansa might be heading for a monopoly in certain markets but I think that will be put to an end once their competition regroups. Laudamotion already announced flights from Stuttgart, though most are international, I am sure they will eventually add some domestic ones as well.
Germany-Austria, a great source of income for LH Group, is currently being attacked by both easyJet and Wizz Air. Will be interesting to see how W6 performs as I believe this is the first time VIE is being connected to secondary German cities by a non-Germanic carrier.

Also, don't forget that unlike the US, European airlines face much greater competition from their neighbors. Just look how many countries there are around Europe where each has at least one airline based there. So even though Europe might have lost some airlines, international market has remained relatively competitive.

One airline to watch is Romania's Blueair. They are quietly growing and building a market for themselves not just in Romania but beyond. They have been extremely successful in Larnaca, they are buying Air Moldova and they just announced flights to Krakow, Stuttgart and Venice from Turin bring the total number of destinations to 18. More importantly, they managed to defend some key Romanian markets from their home base in Bucharest.

The main intra German competitor is Deutsche Bahn. Easy is doing well and besides that anyon can enter the market.

No one here has mentioned cargo. Including truvking to neighbouring countries hubs, this is an open market from anywhere to anywhere . Including Players from countries that do not even have an industry that generates Export or Import freight.

Here as well LH is doing fine because of their well defined and competetive product

Finally, there are about 160 carriers based in Europe plus those from third countries enjoying reciprocal rights. Calling that Environment a Monopoly is a joke.

Even within Star Alliance there's competition for the Lufthansa Group from SAS Scandinavian Airlines, LOT Polish Airlines and Aegean. None of them are in any way connected to Lufthansa. And then of course there's a whole bunch of airlines outside Star Alliance. So Lufthansa may be a big player, but they're nowhere near a monopoly.

max999 wrote:

amadorE175 wrote:

ikolkyo wrote:

Don’t see how it’s any different from IAG, just that their name isn’t associated with a certain airline.

I think this is where the perception of LF monopolizing the continent come from. LX, OS, and SN all subsumed into the LH hierarchy. It seems less like the union of separate companies I think of when IAG or AF-KLM group come up.

What's the intra-Germany competitive landscape look like now with AB gone? That seems like a much bigger monopoly concern for consumers than the wider European market.

That's the real concern! I understand LH has a 90% market share in the country, which is the biggest economy in Europe. I believe LH drives higher prices in the intra-Germany market and in the long-haul market due to the this monopoly situation. German consumers are paying the price for it.

For example, Norwegian long haul has entered other major European countries like UK, France, Spain, and the Nordics. But for whatever reason they haven't entered Germany.

Lufthansa has no monopoly at all on the German market. EasyJet just jumped into nearly every market AB served before their bankruptcy. And prices are now cheaper than before.

Yes, sad that AB is gone, sad that I lost my hometown OneWorld carrier, but with EasyJet I get cheaper prices on most trips within Europe. On top of EasyJet we have a few other airlines trying to break into the German market or enlarging their share. Ryanair topped up their flights in Germany, including own flights at TXL and DUS, the former bases of AirBerlin. Germania enlarged their fleet. And there is LaudaMotion in Vienna (where AB owned Niki operated), which also now flies from several German cities, including Berlin. So from a pure customer perspective, there is nothing to complain about...

FACT-CHECK: Does have have 90% market share? >>> NO !

Actually I think LH has a much tougher competition now than they had with AB. And LH is struggling massively with integrating some of the former AB ops into Eurowings. Their on-time-performance is absymal.

J343 wrote:

This is exactly what I meant. Maybe I used the word monopoly in the wrong context but the LH group seems to be absorbing the smaller European carriers. Of course we have IAG and AF-KLM. Obviously there are others that aren't part of the 3 just yet i.e Finnair, SAS, Air Europa, Alitalia, Air Italy to name a few. But with the recent news of LH wanting extensive cooperation with Alitalia (which could potentially turn into acquisition) then perhaps there is a risk (or small) of monopoly or leaving little room for competion. IAG wants to buy Norwegian, potentially Finnair (no speculation yet but suspecting) then there will potentially be no room for competition.

So what would be the problem with that? Alitalia should be in insolvency for two decades. They are kept afloat with taxes of the Italian people. A disgrace to that country. If LH thinks they can cooperate with them, let them do it. If Alitalia sees benefits in that partnership, too, why not? Up until now they were tight partners with AF-KL, another multi-airline-monster within Europe.

Overall Alitalia is not Italy's largest airline anymore. EasyJet is transporting more pax within Italy than Alitalia. Since many years! There is also Air Italy and the very good Italian train network, similar to Germany. There is no monopoly of Alitalia and there won't be no monopoly with a LH-AZ-partnership.

There will also be single markets with a monopoly. But you will always have that. Worldwide. In basically every country. If markets are very small, so that they just barely can support an airport and an airline flying there, you will usually see one airline, which has a hub nearby, operate flights to this airport. And also usually no other airline would dip into that market, except if they know that they have much lower costs than the competitor and thus expect push the competitor out with lower fares.

LH is not buying AZ
AZ is currently loosing € 500M / year
LH may wait to buy AZ's valuable assets - planes, crews, slots, but can wait until the bankruptcy

The bankruptcy of AZ won t happen. They will be bailed out by the state until hell freezes or Italy gets a reasonable government. Not sure which would come first.

PanHAM wrote:

The bankruptcy of AZ won t happen. They will be bailed out by the state until hell freezes or Italy gets a reasonable government. Not sure which would come first.

Easier that hell freezes!
AZ will bail out only after Italians looses freedom to govern the country.

JayBCNLON wrote:

IAG was pretty much an acquisition of IB by BA, only the legal framework appears to indicate a merger of equals.

That’s very true. And today BA remains the most valuable bit of real estate in IAG.

Thing that you are talking about is consolidation. Lufthansa is just big player like any other big player in Europe. Look at Ryanair or Wizz, they are not consolidating but taking big pice of Vienna and other markets. So please don’t look at just one player, but look at it more globally.

Thing that you are talking about is consolidation. Lufthansa is just big player like any other big player in Europe. Look at Ryanair or Wizz, they are not consolidating but taking big pice of Vienna and other markets. So please don’t look at just one player, but look at it more globally.

Thing that you are talking about is consolidation. Lufthansa is just big player like any other big player in Europe. Look at Ryanair or Wizz, they are not consolidating but taking big pice of Vienna and other markets. So please don’t look at just one player, but look at it more globally.

Hello,


Finally the airline deregulation creates monopolies instead of good compétitions. I prefer to pay higher Airlines tickets and had a good service.

Finally derugaltion is
- Less Airlines and less choice
- It's not good for Airlines employees
- less quality

Hello,


Finally the airline deregulation creates monopolies instead of good compétitions. I prefer to pay higher Airlines tickets and had a good service.

Finally derugalation is
- Less Airlines and less choice
- It's not good for Airlines employees
- less quality

TK has a better shot of "monopolizing" Europe in few years than LH to be honest with you:) when you have IAG, AF-KLM, easyjet Ryanair, tough to monopolize such a competitive deregulated market.

@Pottok Prices are dictated by the market and the Airline market has Special rules other ,arkets do not have.

Take Germany with it's polycentric structure and 2 Major LH hubs which offers direct flights between the 2 hubs by at least one carrier but possibly two carriers, the German and the carrier of the corresponding Country. The fnon-stop flights ldemand the highest Prices. On top of that, passengers originating from the 2 hub Points but also from any other market in Germany have numerous choices by using flights through other non German hubs. Not only in Europe but in the Middle or Far East as well.

If you want to regulate that, you will not do the passengers a favor. The bottom line is, in all fields, from legacy to low cost there is vital competition available to the consumers.

How is what's happening in Europe any different than what happened in the US where the major legacy carriers were merged into three large carriers and a number of smaller, secondary carriers? It would be quite normal for Europe to be similarly dominated by three large airline groups (LH, AF-KL, IAG) with a bunch of smaller carriers (U2, FR, DY) playing the role of WN, B6 and AS in the States. It's a pretty efficient market structure for today's more integrated pan-national economy.

Spend five minutes looking at domestic flights from Stuttgart, and please don't suggest DBahn as competition

TK doesn't have cabotage rights so can't dominate Europe.

Pottok wrote:

Hello,

Finally the airline deregulation creates monopolies instead of good compétitions. I prefer to pay higher Airlines tickets and had a good service.

Finally derugaltion is
- Less Airlines and less choice
- It's not good for Airlines employees
- less quality

I don't know if you flew before deregulation (I didn't) but I wouldn't expect "higher airline tickets" but rather to pay twice as much or more. Meaning much less people could afford it.

No. Eirope is made up of 27 national economies, plus the ones not in the EU but in the ECAA. The USA is a single one and see hhow they treat their two neighbours.. Turkey is not even a full member of the ECAA and the won't be a member of the EU for decades to come.

Cunard wrote:

CZ is China Southern Airways, I'm assuming you meant CSA Czech Airlines whose code is OK.

The right airline but the wrong name. It's China Southern Airlines, NOT China Southern Airways. In fact the great majority (over 80%) of Chinese airlines contain the word 'Airlines' in their name. CA is the biggest exception. BK (i.e., Okay Airways or OKAir) is the only one I know of that uses 'Airways'.

I do not think LH wants to buy Alitalia. LH tried to enter Italy before with the Lufthansa Italia brand, but called it quits after a short while. Competition skewed in AZ's favor.

If AZ were to fold, LH could come in and take over. It remains to be seen.

IAG has bought shares in Norwegian. They are said to be interested in a purchase of the airline, but Norwegian says they are not interested. Who knows what can happen here because, although Norwegian posts good load factors, good revenue etc. Due to their rapid expansions, plus acquisition of aircraft, they almost have no cash-flow.

IAG basically wants Norwegian, because the airline has become a major thorn in their side. They are know one of the larger, if not largest long-haul operator out of Gatwick. Norwegian claims a 90-95% load factor in their premium cabin on outbound flights and almost 100% on the return flights.

I flew before deregulation and the price wasn't a problem. Everything cost and you should pay the right price.

Pottok wrote:

I flew before deregulation and the price wasn't a problem. Everything cost and you should pay the right price.

that's stupid talking imho
in Europe @ 28 the 95% of the flights are under 4 hours
so what do you mean with service?
you do need fluffy seats and fancy food for a 2 hrs trip?
you've obviously never flown business class an intra-EU route with mainline airlines
LH and AZ - two of the airlines I mostly use on business trips, simply have a stupid courtain between the so-called "business class" and the economy.
seats are almost identical - same width, slightly more legroom
you have a complete lunch or dinner if the flight is on lunch or dinner time - if you're flying in the afternoon, you get more choice of snacks
wine, beer and other beverages and snacks are served in economy also
annoying childrens and reclining a**holes are allowed to seat in business, too
so no very much comfort...

OSL777FLYER wrote:

Back in 2005, my dear Professor in Aviation studies said that in the future, in some form or other, only three "legacy carriers" will remain in Europe.

Lufthansa,. British Airways and Air France.

I am beginning to think he was and will be right.

In 2005, he didn't know about Ryanair. My question ... if you only get three, and Ryanair will be part of the three, who do you drop?

Lufthansa is the biggest, and profitable. And has a sane management and work force.

Air France has the worst economics, and labor relations, but would get state support before it ever closed.

IAG .. better economics, but without state support maybe they're the one who would lose.

Slightly off topic but I just read that LH will be 'downgrading' its seasonal, second daily, FRA-IAD LH 416/417 from a B744 to a A333 next summer. Anyone know why?