Lufthansa Group Reveals Plans For Their Four Hubs

I’ve written before about how the ‘Big 3’ airlines are forming in Europe – IAG, Air France/KLM, and Deutsche Lufthansa (Lufthansa Group).

Each of the Big 3 has slightly different growth strategies, and there were some very interesting insights into Lufthansa’s growth strategy that Tiffany sent me me last week, as part of the announcement of their new service to Austin.

I had previously considered the group’s strategies as a series of brands (Swiss, Brussels Airlines, etc.) given they all fly to so many of the same destinations and are located so close to each other geographically. However, the details from the group last week made me realise their strategy is more around multiple hubs rather than multiple brands.

I had originally considered Brussels to be a hub for Lufthansa Group, as it is the home of Brussels Airlines and connects passengers, especially between Europe and West Africa. But the announcement from Lufthansa Group does not mention Brussels once, so I now understand the group’s hubs to be as follows:

  • Munich
  • Frankfurt
  • Zurich
  • Vienna

Munich

Lufthansa Group is rapidly growing their Munich hub much faster than any other hub and will focus on increases in both first class passengers and Asian flights.

They have already moved five Lufthansa A380s from Frankfurt to Munich, and this has been so successful they are considering moving more in the coming years (remembering Lufthansa has a fairly small A380 fleet of 14 aircraft, with no more on order).

Additional narrow body aircraft will be moved from Frankfurt to Munich to support increased connecting passenger flows onto these larger aircraft at Munich.

Munich could be the future of Lufthansa first class, with most of the A340s that feature first class to be moved from Frankfurt to Munich as well. Munich will focus on both premium passengers (in line with the increase in first class aircraft), as well as services to Asia, with increased frequencies to Seoul and Singapore, as well as new routes from Munich, to both Bangkok and Osaka, the latter being transferred from Frankfurt.

The group expects double digit growth in terms of passengers numbers at Munich which is impressive for such an established airline.

Frankfurt

When most people think of Lufthansa, they think of Frankfurt.

In terms of passenger numbers, Frankfurt is still by far the busiest airport in Germany (and one of the busiest in Europe), with almost 50% more passengers each year than Munich, which is the second busiest in Germany.

Now Lufthansa Group is not looking to downsize Frankfurt per se, but they are planning to limit their growth at Frankfurt in the short term to improve their on time performance. They will add some new destinations from Frankfurt but these are not the long haul, premium destinations you might guess (other than, perhaps Austin although Tiffany has predicted the new route will not feature first class). And note some of their biggest aircraft will be (or have already been) moved to Munich as discussed above.

Lufthansa Group is focusing on having a good quality destination mix from Frankfurt, to attract connecting customers.

Zurich

While Swiss has an excellent first class product both in the air and on the ground, and an extensive long haul route network, the focus for this hub over the next 12 months will be European destinations, with only moderate growth.

I would expect to see new European destinations (they’ve just announced services to Bremen), as well an increased flights to existing European destinations.

This means it is likely there will be no new long haul destinations announced by Swiss over the next 12 months.

Vienna

Similarly to Zurich, Lufthansa Group will be focusing on new European destinations from Vienna, rather than new long haul destinations, although it will increase the frequencies of some existing Austrian services to North America.

Lufthansa Group is so focused on the efficiencies and profitability of each hub in its own right that they have not yet decided where they will base the new Boeing 777-9s, which will be delivered from 2020 onwards.

They will continue to shift aircraft and routes between hubs quite rapidly to both save and make money.

What about Berlin?

Berlin is a fascinating city for aviation. Despite being the capital of Germany, and its biggest city population-wise, it has only the fourth busiest airport in Germany (Dusseldorf is third). This is due to a number of factors, not the least because of the unfortunate tale that is Berlin Brandenburg airport, which I have written about in detail here.

You may recall that when airberlin ceased services altogether, Lufthansa stepped in to operate flights between Berlin Tegel and New York. So, there was a chance Lufthansa would build up services to and from Berlin Tegel and potentially even turn the airport into a mini-hub, noting the space and capacity constraints of Tegels unusual design.

But unfortunately Berlin to New York was not successful for Lufthansa, and they ceased flying this route earlier this year. This means the group only operates flights from Tegel to their four hubs.

I was quite saddened to learn that the biggest operator from Germany’s capital airport is now… easyJet.

Bottom line

I always find it interesting to hear about how the Big 3 US legacy carriers (American, Delta and United) make their multi-hubs work, especially how they target certain hubs for certain passenger mixes, and these aren’t necessarily the passengers from the geographic locations closest to that particular hub.

But I had always thought of Lufthansa Group as a series of brands/airlines rather than a series of hubs, and it shows just how well the group’s centralised management systems are working that they can switch in and out aircraft and routes so easily to both reduce costs and maximise revenue.

I found it especially interesting that Lufthansa is so focused on making Munich a premium hub, at the expense of Frankfurt. It will be very interesting to see when and if Munich overtakes Frankfurt in terms of number of flights with first class.

Which Lufthansa Group hub do you prefer to connect at?

Comments

  1. Berlin not having direct to the US is really sad.

    As a NYC based flyer I love doing long weekend trips to Europe. I’d love to go to Berlin, but I haven’t gotten there yet simply because there are too many other non-stop options to see.

  2. „Munich could be the future of Lufthansa first class, with most of the A340s that feature first class to be moved from Frankfurt to Munich as well.“

    Intestine yet contradicting statement.

    Currently the A346 are progressively phased out in favor for 3 class A350 due to engine costs (they are no longer subsidized by Airbus).

    Furthermore LH Technik in MUC does not service Boeing aircrafts.

    Concluding from those facts the only possibility if LH truly wants to retain their F class availability, they need to either transfer more A380s from Munich or change up their order of A350 from 3 class to 4 class.

    Both options not impossible but still a long shot…

  3. When the FCT in FRA is so developed, why move everything to MUC?

    I get it Munich is a richer city than Frankfurt, but people are already used to going through Frankfurt.

    I never quite got why FRA was Germany’s main airport anyway.

    I get it that Germany isn’t like the UK (my home) where its London then everywhere else.It makes sense that the main airport is in London in the UK, this perhaps wouldn’t work in Germany.

    However, why not base operations in the Nordrhein region, which pre reunification was the hub of West Germany. Failing that Berlin was never a b grade city, Berlin would have always made sense.

    Frankfurt tucked away towards the south is pretty illogical, Munich although a rich city, is just one city (unlike the Nordrhein area and Hamburg is bigger than Munich).

  4. @K4 – Frankfurt generates lots of paid business and first class traffic due to the banking center there. That’s what pays the bills, that’s what makes the hub. Plus the rail links to the airport can bring in a ton of people. It’s not just the size of the city itself – it’s the wealth, propensity to travel and generate high yield business, and the transit links that amplify the cacthment area. Berlin, while nice, and Dusseldorf, while nice and populous, simply does NOT generate that kind of high yield traffic. Berlin is a big but relatively poor city. There’s a reason why Easyjet is the largest carrier there and why most US carriers cannot make a year round service to USA work – it’s a big city with lots of low yield demand. Case closed. Similarly in Dusseldorf. Big city, big catchment area, but Delta can barely make a year round service to North America work, United failed years ago,American failed, and Lufthansa has transferred its North American flights to Eurowings. There’s a reason for this – low yield/ high volume. That’s not what Lufthansa goes after. Lufthansa goes after high yield travelers, and that you find in spades, primarily in Frankfurt, later in Munich.

  5. Also, @ James -Brussels is still VERY MUCH a hub for the LH group in Europe. They’re just not making any major changes per the announcement you reference. It’s a major hub that does, as you mention, connect Europe to Africa, in a way that LH, LX, and OS could never do from their own hubs. So I’d put Brussels in with the mix too. Also, I’ve shared this commentary with friends who work in network at Lufthansa who’ve already scoffed at your notion that Brussels isnt a hub – they think it is, and they manage the airline, so I’d revise that.

  6. @Evan

    There are in fact direct Berlin flights to the US. Both United (EWR) and Delta (JFK) fly from NYC direct to TXL.

    That long weekend in Berlin from NYC is definitely possible!

  7. @Evan – there are multiple non-stop flights from NYC – Berlin. Flying Delta NYC-TXL next Friday, and there’s also a United flight from Newark.

  8. @ Jason – I had also considered BRU a hub as I said in the article. Lufthansa Group cant think they much of BRU as a hub if they don’t mention it in their strategic group plans once!

  9. @James
    You missed quite a number of facts here but i guess it’s one way to understand the statement that Lufthansa sent out a few days ago.

    LH has been feuding with Fraport (the owner/Operator of FRA) mostly due to LCCs (Ryanair) being granted access to FRA and getting huge discounts while LH continues to pay steep charges. LH owns 40% of MUC terminal 2 and they are keen on growing that hub. In that statement they call MUC a first class hub throwing shade at FRA though MUC has actually also been rated the best airport in Europe repeatedly.
    MUC has a big premium catchment area. Have you seen the prices we pay from that airport? LCCs there are almost non-existant and LH has an almost monopoly.

    And you got the point on the B777-9 wrong. The decision will be made between MUC & FRA. The other 2 hubs are not into consideration as those planes were actually ordered to replace the B747s. Swiss is happy with the B773 and Austrian last ‘new’ aircraft was a 17yr old B772 they got in the last couple of months. LH said they will station those planes where they feel that they get better conditions and they are getting those very good conditions at MUC.

    Also, the Osaka route is being transfered from Frankfurt to Munich.

    Brussels is considered part of the Eurowings group that’s why it’s not mentioned as a 5th hub. Neither is Düsseldorf though DUS is EW biggest hub as is Brussels airlines at Brussels.

  10. In addition to United and Delta’s flight from Berlin. American will start flying seasonal into TXL in summer of 2019. Berlin might not be as rich as Frankfurt but Lufthansa simply isn’t interested in another hub airport. Would really like to see United do a San Francisco to Berlin flight. With the tech startups in both cities that flight should well with premium traffic. And let’s not forget that Berlin is the capital of Germany (Government spending, lobbyists, companies having sales/pr offices) and the most populous city of Germany. The city is only one hour away from cities like Leipzig via ICE and also get’s cross border flyers from Poland because it’s so close. You can’t tell me that a major airline can’t make Berlin work. The issues with BER are a shame but the airport is serving more traffic then ever. Easyjet was very happy to pick up the business on the short haul.

  11. I hope they don’t pull the A380 off the FRA-IAH route. My kids are excited to be able to fly on the double decker plane after always flying the A330 on the FRA-DFW route. Booked it for mid-Aug using United Miles transferred from Chase UR.

  12. @Max @Micach

    True…. I guess it rarely comes up in my Google Flight filters since the cash rates seem a lot higher than other nonstops to central/western Europe, probably because Lufthansa isnt competing. For instance, I dont see a ~4 night for less than $1,200 RT in economy (even winter) through end of schedule, whereas its easy to find prices to FRA/MUC nonstops for almost 50% less.

  13. I wonder if LH has any plans to build a first class terminal at MUC if they are shifting their operations around

  14. it’s not all doom and gloom for FRA, considering the single most premium-heavy aircraft in LH group, both in absolute seats as well as %total seats, is the 748, and it’s still all FRA.

    388 is 8F 78J
    748 is 8F 80J

    re-balancing with MUC is much needed. Every time I pass through FRA it’s bursting at the seams while MUC could be nearly tranquil at times.

    “Berlin is a fascinating city for aviation. Despite being the capital of Germany, and its biggest city population-wise”

    That’s a bit of a stretch. On the German “EMR” level, behinds the behemoth of Rhine-Ruhr, it’s nearly a 4-way tie between Frankfurt, Berlin, Munich, and Stuttgart (and they use drastically different area sizes to define the EMRs, so it’s not easy to make apples-to-apples comparison).

    Germany is rather unique among European nations because they take the notion of multi-core, both in population as well as wealth-distribution, to the extreme, especially when considering their limited land mass and even more constrained coast line.

  15. While Zurich and Frankfurt have the best rail connections to the city (cannot comment about VIE), Munich is simply the best airport to connect in. Security (which is managed by the state, not the federal government in Germany) is also way more efficient out of MUC than FRA.

    What doesn’t make sense to me is why the three airlines have vastly different fleets and seat maps. You would think that there would be some similarities / adoption of best practices across all of DLH’s hub carriers.

    I do think Brussels is being de-emphasized. Isn’t it supposed to be rebranded Eurowings?

  16. James,

    Brussels Airlines is part of the Eurowings group, which is indeed a part of the bigger Lufthansa group, but strategies and hubs are managed seperately.

    Brussels and Dusseldorf will be the most important hubs within that group.

    You’re mixing things up a bit now 🙂

  17. Berlin is not like London is to the UK or Paris is to France. Yes it is the capital and is Germany‘s largest city by population but most German industry is headquartered outside of Berlin. And it’s suburban area isn’t as large as other German cities. Germany only reunified 28 years ago today so West German industries were naturally established in the West German mainland not in the island that was West Berlin. Frankfurt is pretty much the financial capital of Germany, Munich is where many tourists go and has a lot of industry. Frankfurt has a much more central location in Europe than Berlin making it easier for connections.

  18. @Endlosluft
    Berlin really doesn’t have a huge catchment area with enough premium passengers. Do you honestly think that Lufthansa wouldn’t have built a small base there by now?
    Even Air Berlin was cancelling flights from TXL before its demise and concentrating on Düsseldorf. #AirDüsseldorf

    Those start – ups you’re talking about are just that. Start-Ups. They don’t have cash to spend on premium travel.
    Government travel would probably be more interesting to Washington and LH/UA or even Air Berlin didn’t find it worthy to operate said route.

    Berlin is ‘poor and sexy’. Arm und sexy. A long haul LCC could try work it out there.

  19. Far and away, Zürich is my preferred choice. The size, layout and quality of lounges make it a better choice than flying from Stuttgart and connecting to a long-haul from MUC or FRA (even though STR is closer to my home.)

    I’ve never (as a non EU passport) waited more than 2 minutes to clear immigration and bags always arrive quickly at ZRH.

  20. Expanding Munich but not Frankfurt in a sense makes sense for Lufthansa. Frankfurt Airport is pretty much at capacity (just think of all the times you have to take busses to get to the aircraft) until Terminal 3 is built. On the other hand, Munich Airport opened a new terminal two years ago, so there should be more room for them to expand there. I wouldn’t be surprised if Lufthansa expands service out of Frankfurt once T3 is built.

  21. Munich T2 used to be a wonderful terminal to connect, especially travelling coach, but the new satellite has made things a bit more complex. Two years ago they slashed F service out of MUC, as they started removing seats from all A330 and introduced A350 on many routes (DEL, BOM, SIN, ICN, BOS, ORD, etc…). The recent A380 move has more to deal with lack of capacity in FRA than a real desire to enforce F in MUC. Honestly, I question whether LH is really keeping F in MUC or even altogether…
    Frankfurt is a nightmare to connect in coach and J, but when you travel First it is a whole different experience. All First lounges and especially the FCT are way better than those in Munich, though the new First Class Lounge in MUC Satellite is anyway a huge improvement compared to the old lounge.
    Zurich used to be a good compromise, not as lean as MUC but still manageable, not as nice lounges as in FRA but still ok. In the last 24 months they have opened new lounges, started a proper first class transfer service among terminals and, together with the Satellite opening making transfers more complex in MUC, it is now my preferred airport in LH group.
    Vienna is way way behind all of them since it lacks infrastructure, connections, lounges, first class and OS planes are old and worn out. Food in J is the only reason to go there, which it’s anyway less spectacular than it used to be.
    Brussels is marginally better as an airport than VIE but SN is the worst airline of the group in any category so I avoid unless I really have to go there. BTW travelling with SN is also penalizing miles accrual…

  22. LH has switched the 350 they used to operate MUN-BOM back to the 330. And even after that munich flights to BOM are often delayed or even cancelled if ur unlucky. On the other hand the 747 service BOM-FRA is rarely late or cancelled.
    I travelled on a 20yr old 747-400 a few days back from BOM-FRA only because BOM-MUN was delayed and i would miss my connection to madrid.

  23. 1. TXL is a total joke. It is tiny, outdated, and no direct rail link to the local transit system.

    2. I second that Berlin is not an affluent city and therefore there is not enough premium traffic to justify a lot of long-haul flights.

    3. I do not understand why the Lufthansa group does not want to expand the Swiss and Austrian brands more outside Europe. They have a higher reputation than Lufthansa. Many of LH’s long haul aircrafts still have 2-2-2 business class seats. I avoid them at all costs.

  24. Talking of North American destinations from Berlin : AC also operates flights from Toronto in summer.

  25. I understand that Berlin is relatively poor city by German standards , but that it is by standards of the biggest and one of the most developed nations in Europe.
    Current intercontinental network from Berlin is a plain joke.
    Warsaw (1/3 of Berlin GDP ppp ?) has bigger American network.
    Kiev (1/10 of Berlin GDP ppp ??) has about the same American network as Berlin and slightly bigger Asian network (yes, that’s Kiev , Ukraine)
    This is a good case of what happens if you don’t have a hub. You just become a mindless collection of low cost / short haul flights that by no means make a truly global city.
    I think Germany can and should do better.

  26. Brussels is considerred a hub by LH! It is clearly (also stated) the Africa Hub and is going to be expanded for that business. Brussels will be integrated into Eurowings and they are taking over the longhaul handling and provide planes for a better experience for customers and bring in stability into operations in long-term.

    Austrian is facing massive competition by LaudaAir/RyanAir and other LCCs and has had problems with their numbers for a while. Now that staffers have new contracts, their homework is to show the numbers to be receiving more and new planes by LH. It is openly – and clearly communicated that way.

    SWISS has a very good reputation for premium cabin and with Edelweiss for the leisure traveller. However, there is potential to expand within European network. So why not. Swiss also has the advantage of travellers with bigger pockets, also one reason not to consider PE for now.

    The issue with FRA has already been stated above. Why would LH want to pay more, when LCCs pay less and FRAs performance seems to disappoint them too. I prefer to connect in ZRH, MUC when flying LH group anytime over the huge and clogged FRA airport.

    The Berlin issue is nothing new and it has been said. Low yield. Eurowings will now fly both NYC airports on the same day, taking over LH traffic. They are getting the BIZClass to lure the low yield customers to pay for better inflight experience. Leave aside the major hiccup with too rapid expansion and resulting performance issues.
    Many travellers departing from BER are actually from Poland. There is an intercity train to Warsaw that only needs a couple of hours and the flight network and prices offered for leisure travellers is better. Even with BER opening, the idea was always just to have a “capital” airport. If AB or LH would not create a hub there, it would suffer heavily. In fact, now the LCC terminal is going to be expanded, as the biggest demand is calculated there.

    Just the same with HAM. Many of the travellers there are actually from Denmark, as they prefer to fly from there than from CPH or BLL and use long term parking for their car there. Germans on the other hand fly to CPH/OSL/ARN/WAW etc to make use of the better prices.

    Just a couple of points that can be researched quite easily…

  27. Some comments regarding the LH Group fleet (I am working as a consultant in the aerospace sector). There are some undergoing major efforts by the group to further standardize the airplane configuration.

    Starting 2019, all newly delivered airplanes from the A320 family will have the same cabin equipment (overhead bins, seats, cabin dividers, galleys), freight loading system, uniform safety and cockpit equipment and functionality.

    To some extend this will also be rolled out to the 777X deliveries. Especially since the new business class will be rolled out to Swiss and Austrian as well. Groupwide re-painting of engines and wings (white) especially at the Eurowings fleet will further harmonize the fleet. All of this is clearly geared towards flexibility in terms of fleet planning and utilization.

    Lastly consolidated flight training schools (European Flight Academy) are an additional effort to increase synergies.

  28. The problem with Berlin is not about the city at this point. It’s the problem with the airports. If they were to build a functioning, modern airport it would become an important hub.

  29. I agree that Berlin will not be attractive for airlines doing long-haul until they sort out an airport.
    SXF and TXL recently made it into a bottom ten list of airports in Europe, and that is not surprising.

    Berlin catchment area is much of western Poland too – the only long-haul connections from POZ are via FRA, MUC or WAW (so all effectively LH)

    Poor but adventurous does indeed describe much of the Berlin area population – once there is an airport that can cope effectively with large ‘planeloads, I could see it making sense for Norwegian to fly from Berlin to many of the Condor destinations, for which we currently have to connect in FRA.

Leave a Reply

Your email address will not be published. Required fields are marked *