Lufthansa Discontinuing Long Haul, Low Cost Airline

Filed Under: Brussels, Lufthansa

For a while transatlantic ultra low cost airlines were all the rage. The sole focus of most of these airlines seemed to be to gain market share, with little regard for actually being profitable.

However, with financing for airlines getting tougher to come by, we’ve seen a reversal of this. WOW Air and Primera Air have gone out of business, while Norwegian is fighting to stay alive.

WOW Air A321 post-liquidation

It’s interesting to see the strategies the big European “network” airlines are taking. For example, Air France launched low cost carrier Joon, though they’re discontinuing the airline this year.

Meanwhile the Lufthansa Group had Eurowings, and it looks like they’re now shifting strategy on that as well. This comes as Lufthansa Group warned of “price deterioration in Europe caused by market-wide over capacities and aggressively growing low cost competitors.”

The Lufthansa Group & Eurowings

The Lufthansa Group consists of Lufthansa, Swiss, Austrian, Brussels Airlines, and Eurowings. Early last year Lufthansa Group had a surprising strategy for Brussels Airlines — they wanted to fully integrate Brussels Airlines into Eurowings.

In other words, they wanted to turn Brussels Airlines into a full-fledged low cost carrier, not to mention they were destroying any brand recognition associated with the airline.

You’d think some people feel national pride in Brussels Airlines, so to take away the national identity of the airline and instead integrate it into the same airline that operates ultra low cost leisure routes out of Germany seemed odd.

Brussels Airlines A330

Lufthansa group backtracks on Brussels Airlines plans

Lufthansa has just made a 180 when it comes to their Eurowings strategy. Once again, up until now:

  • Eurowings operated short haul and long haul flights
  • Brussels Airlines was to be integrated into Eurowings, both for short haul and long haul flights

Lufthansa Group has changed their mind, and now plans to keep around the Brussels Airlines brand. Not only that, but they plan to completely eliminate Eurowings on long haul flights, and instead exclusively operate Eurowings as a short haul brand.

With this new strategy:

  • Eurowings will exclusively operate A320s on short haul point-to-point flights
  • All long haul flights will be transferred to the network airlines (Austrian, Brussels, Lufthansa, and Swiss)
  • Eurowings will achieve a 15% reduction in unit costs by 2022; this will happen through a combination of using more efficient planes and also reducing staffing costs (which can’t be good news)
  • Brussels Airlines will be more closely aligned to Lufthansa Group’s other network airlines, meaning we could see them become more premium

Eurowings A330

One interesting adding wrinkle here is that there was recently talk of Lufthansa possibly acquiring Condor, so I wonder how that fits into all of this.

Condor 767

Bottom line

We are seeing a very real shift in the industry away from long haul low cost carriers in Europe. That’s simply because there’s too much capacity, and it has had huge downward pressure on prices. Network airlines have the benefit of also getting high yield traffic from business travelers, so it’s very tough for ultra low cost carriers to compete.

I’ve thought all along that Lufthansa’s attempt to integrate Brussels Airlines into Eurowings was poorly thought out, so I’m happy to see they reversed their decision.

But it’s interesting to see Lufthansa take it a step further and completely eliminate their long haul low cost carrier. Air France has done the same, so at this point it’s just IAG that has a low cost long haul carrier (LEVEL).

LEVEL A330

What do you make of Lufthansa’s Eurowings decision?

Comments
  1. The changes at Eurowings seem to very much align with Lufthansa buying Condor even though today they vehemently denied that they aren’t that much interested in buying Condor.
    Without Eurowings’ long haul routing which pretty much competes with Condor, EU regulators could pretty much approve LH taking over Condor.

    I’m glad to see Brussels Airlines being left on their own. Great brand recognition especially for their African routes.

  2. If they are serious about Condor, maybe they learned from their failed (rejected/forbidden) attempt to take over flyniki…

  3. “Remember that Air Belgium still will be a big threat to SN in the future”

    ahahahahahahaha

  4. I don’t see lower costs in a low costs airlines. There are some exceptions if you want to fly with your hand luggage in cargo. But if you add seats reservation (of course you don’t want to spend a flight seating separate in the middle seat 😉 ), luggage, credit card charges, you end up with higher price than LH.

  5. Oh and Lufthansa is introducing a new Premium economy seat with the B777-9 next year. The seat will also feature on Swiss from 2021.

  6. @pawel LCC means low costs for the airline, not the passengers. Lower cost with similar prices = larger profit margins

  7. Lufthansa has the ULC experience in economy, so I don’t see what the point would be to have the same thing on planes branded differently.

  8. Lucky,

    This is more like the quiet retirement of Joon than Wow, an unnecessary extra brand in a huge airline that already has a good name in economy.

    The ironic thing is, when I actually looked at using companies such as WoW and Primera on a couple of occasions, the very small premium class at the front was always sold out.

    Yet with lots of basic economy seats remaining. I checked weeks into the future and every day this was the case.

    It suggests that many don’t want to completely sacrifice comfort for a good price, especially when most passengers are very weary of all the add-ins not included these days. And the cost cutting ‘appealing’ to Millennials/Youth is also very patronising and tiresome.

  9. I also never really saw what was “low cost” about Eurowing’s long haul service. I never found any good prices with them. Be interesting to see what they send to Ft Myers RSW instead when the route is replaced.

  10. The title is rather misleading. Since EW operates both short- and longhaul flights, the title should mention that it is discontinuing its longhaul flights, and also that SN will NOT be absorbed into EW, but be retained as an independent brand.

  11. Back when EW started their lo g haul, I got a 300€ two way HAM MIA via CGN. But I never saw these prices again.

  12. I think the legacy European carriers have realized that they can effectively compete with the transatlantic LCCs with Basic Economy fares, and that there are so many existential threats to the transatlantic LCCs that it’s not worth fighting with them. Norwegian can’t really grow anymore with the 787, WOW is gone, Primera is gone, etc.

  13. It’s disappointing and a bit sad to see Eurowings reduced to be a much smaller and less effective Ryanair but at least Brussels Airlines will be staying. Potentially they could take on some of the 787’s ordered by Lufthansa.

    It just seems a bit odd as Eurowings was one of the least LCC of all the low cost transatlantic airlines. If that makes any sense. They had a proper business class and just a general pleasant experience. It’s a shame to see them go.

  14. I am enormously glad that they kwpt SN longhauls aa I fly to Africa quite often. I thunk SN could really serve lots of African deatinations at reletively low cost compare to LH and LX so there is a lot of conplmentarity.

  15. I think Eurowings has a brand recognition problem on the left side of the pond, long haul or not. When I’m traveling intra-Europe, I know who EasyJet and RyanAir are. I know what they offer (or don’t, as the case may be) and I often fly them because they actually fly routes non-stop that the legacies don’t. Nevermind that they also sell me something I want to buy — the exit row. I generally do not fly carriers who make it hard for me to buy the exit row seat.

    Eurowings just doesn’t make any sense.

  16. I like to think that Brussels Airlines might “become more premium” as you put it. I flew SABENA frequently in the early 1980’s, as I was based in Brussels, and have fond memories of their superb First Class with its exclusive lounge on the upper deck of the 747’s…

    And while Lufthansa is at it, why not change the name to Belgian Airlines, since it is, after all, the carrier for a country, not just a city.

  17. All these millennial airlines forgot who has the *time* to travel for leisure frequently.

    Retired citizens. And they have different priorities.

  18. I’m sure ( Sir ) Freddie Laker worked out the ( bad ) economics of ultra low cost Atlantic crossings in the 80s…..

  19. “The Lufthansa Group consists of Lufthansa, Swiss, Austrian, Brussels Airlines, and Eurowings”
    @lucky Edelweiss Air is missing from the list and they have long haul to EZE in Argentina.
    Not sure where this would fit on LH strategy

  20. @Matt Every single LH flight, even the shortest German domestics, feature free drinks including wine and beer and a small snack. How is this ULC?

  21. Isn’t it relevant that Eurowings and Brussels Airlines basically have a high cost base, whereas Level and Norwegian (being startups in comparison) have a relatively lower one? As Rob pointed out on Head for Points earlier today, there is also the question of cannibalisation, in that Eurowings and SN serve areas that are LH mainline hubs, whereas Level doesn’t operate from MAD or LHR or DUB.

    Will be interesting to see how it plays out. Norwegian should have accepted IAG’s bid when it was on the table – the oil price is rising so, whilst I hope they’ll be OK, their financing doesn’t seem too solid.

  22. And, as an afterthought, any time I’ve flown on Eurowings (or Germanwings as was) they’ve been great.

  23. @Tobias, LH also offers Econ Light (basic economy) that offers no carryon bag or seat assignment. Yes you get the same food on-board but the pre departure experience leaves a lot to be desired.

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