Lufthansa not giving up battle for short-haul routes

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Frankfurt, Nov 3: Even as Lufthansa Airlines is focused on establishing itself as the global leader in premier and business travel segment, the world’s biggest carrier — in terms of the scheduled passengers carried — is not ready to give up the battle with low-cost carriers for attractive short-haul routes.

“A strong brand needs growth and as the foremost part of our strategy we believe in full assortment of services,” Holger Hatty, member of the board of Lufthansa passenger airlines, said.

According to Hatty, the established low-cost carriers (LCCs) are no longer confined to point-to-point short haul flights but are gradually operating on more than one stop-over flights. In such a situation, if the legacy carriers vacate the short haul routes for the LCCs, their market presence would gradually shrink.

As an alternative, Lufthansa not only offers very low fares, but also has a low-cost subsidiary Germanwings to compete with the other LCCs.

The airline’s four major strategies are full assortment, multi-hub, cost reduction and product differentiation. Under the full assortment strategy the airline covers all segments of passengers providing first class, business, economy, low cost, charter and private jet services.

The full assortment strategy helps the airline to maintain its presence in all market segments. The second pillar of the group’s strategy is multi hub. Lufthansa believes that an airline is a major infrastructural representative and is also responsible for building up traffic in a region.

According to Hatty, since the almost choked Frankfurt airport did not come up with a fourth runway even after more than 10 years of lobbying, they were forced to establish a second hub at Munich, now one of the most important in Western Europe.

“Also, at Munich, we have an exclusive terminal for our passengers and as we own 40% of the terminal building, an equal percentage of the non-aeronautical revenues from the airport comes to us,” he said.

The company had evolved a three-year 1.2 billion cost reduction programme through higher productivity, longer flying hours for aircraft, fees negotiations with airports and fuel hedging.

As the three-year period will come to an end this fiscal, Lufthansa is already working out on a 3.6 billion new cost saving plan.