In Europe, you have three major global airline groups — Air France-KLM, International Airlines Group (IAG), and Lufthansa Group — and they’ve been on a bit of an airline shopping spree lately. For example, recently we’ve seen Air France-KLM invest in Scandinavian Airlines, and we’ve seen Lufthansa Group invest in airBaltic and ITA Airways.
Currently, there’s a lot of talk about carriers being interested in investing in Air Europa and TAP Air Portugal, particularly Air France-KLM and Lufthansa Group, in order to build their presence on the Iberian Peninsula. However, it seems to me like there’s another airline that should be ripe for a takeover…
In this post:
Germany’s Condor needs to find its place in the market
Condor is Germany’s only long haul airline that’s not owned by Lufthansa Group. When Condor was founded back in 1955, Lufthansa was actually a shareholder in the company, as the airlines cooperated closely, with Condor essentially being Lufthansa’s leisure airline.
Over time that changed, and in the early 2000s, Lufthansa sold its Condor shares to Thomas Cook. When Thomas Cook went out of business, Condor ultimately became independent.
It has been an exciting several years for Condor, as the airline has evolved in an incredible way. For example, Condor has replaced its outdated Boeing 767-300ERs with Airbus A330-900neos, offering an impressive passenger experience. Furthermore, the airline has increasingly started competing more directly with Lufthansa in long haul markets, flying between Frankfurt (FRA) and major cities in North America, ranging from Los Angeles (LAX), to Miami (MIA), to New York (JFK).
The issue is, Condor has struggled with how exactly to position itself:
- Condor doesn’t belong to one of the major alliances, but instead has some individual partnerships, like with Alaska, Emirates, etc.
- Condor lacks a huge domestic and regional feeder network, though it’s something the airline has increasingly been working on
Even as Condor has grown in recent years and has increasingly competed directly with Lufthansa, the airline has still been reliant on its biggest rival. Frankfurt isn’t a huge air travel market independently (especially for leisure travelers!), but rather the reason it’s such a big aviation hub is because of the size of Lufthansa’s presence there, plus because of the business demand.
For years, Lufthansa has provided feeder traffic for Condor, at specially negotiated prices. Condor largely fills its planes with passengers connecting to and from Lufthansa flights. This agreement has been mandated by the government, but as you’d expect, Lufthansa has been trying to negotiate its way out of this, as it no longer wants to be affiliated with Condor.
While there has been a lot of litigation, one thing is for sure — Condor needs to figure out a long term, independent plan, where the airline can succeed without relying on its competitor.
Condor seems like a great fit for IAG & oneworld
There have been rumors going around that IAG, the parent company of British Airways, Iberia, Aer Lingus, etc., is considering investing in Condor. Let me emphasize that these are just rumors, and when airliners.de approached Condor about the rumor, the answer was essentially “no comment.”
So I have absolutely no reason to believe that advanced discussions are taking place. However, with all the talk of airline deals in Europe, I’m surprised Condor isn’t brought up more. When you step back and look at the market dynamics, it sure seems like Condor could be a very attractive addition to the oneworld alliance, and to the IAG airline portfolio:
- IAG is strong in the UK, Ireland, and Spain, but weak east of that, so this would fill a major void in the airline group’s network
- The same is true of the oneworld alliance at large; ever since airberlin went out of business, oneworld’s European airlines are limited to British Airways, Finnair, and Iberia
- Joining a major transatlantic joint venture could be a game changer for Condor, in terms of being able to command higher fares
From the perspective of consumers, Condor being acquired by a major airline group would be a mixed bag. On the one hand, it would probably mean that Condor’s fares wouldn’t be as attractive. On the other hand, it would likely mean that more travelers would get more benefits on Condor, and the airline could increase German connectivity for one of the major alliances.
It’s interesting to note that back in 2019, LOT Polish Airlines was going to acquire Condor, but that deal was ultimately called off, at the start of the pandemic. That would’ve been an interesting combination, since I’d argue that LOT is also in the wrong alliance (given its second class status within Star Alliance).
The main challenge with Condor is that even if the airline were to be acquired, it would still need a long term shift in its business plan. Frankfurt just isn’t that huge of a market, without an absolutely massive connecting network. While Condor is trying to build up its regional network, it’s never going to be able to scale to the level of Lufthansa, and that’ll be a challenge.
Could there be merit to Condor moving its hub to another German airport with less competition, near a larger population center, like Berlin, which has for years been sort of neglected by Lufthansa? While there’s a huge population there, it’s not exactly a high yield market.
Germany really is a tricky airline market, when you consider the lack of leisure demand to the country (unlike France, Spain, etc.).
Bottom line
While we have no reason to believe that anything will happen, it sure seems to me like there should be interest in some sort of acquisition of Condor, given the shopping spree the major European airline groups are on. Condor kind of has a confusing spot in the market right now, and I could see merit to an investment from IAG, and the airline joining oneworld.
That’s not to say that anything will happen, but if Condor’s agreement with Lufthansa ends, something will need to be figured out…
What do you make of the concept of Condor being acquired by one of the major European airline groups?
What does Condor bring to the table to anyone ?
Slots at FRA? Leisure flights to Whitehorse ?
As long as they don't become good on a certain desirable market segment that bigger airlines fail at no one will put a penny in.
Look at the airlines that are considered for purchase: they serve desirable touristic countries (ITA, and Air Europa) and/or have brand recognition and operations in specific market segments that...
What does Condor bring to the table to anyone ?
Slots at FRA? Leisure flights to Whitehorse ?
As long as they don't become good on a certain desirable market segment that bigger airlines fail at no one will put a penny in.
Look at the airlines that are considered for purchase: they serve desirable touristic countries (ITA, and Air Europa) and/or have brand recognition and operations in specific market segments that are considered growth opportunities by other airlines (Hispanophone America for Europa, Africa, Brazil...) or they have particularly efficient operations and can give access to cheap workforce and feeder traffic (Air Baltic).
Condor has none of those
I flew them twice on a transatlantic in business; compared to my experiences with SN and LH in business, they are much much better !
So giving how Miles&More is treating his members lately, I guess I'll be very interested to see which partnership they can make, 'cause I'll certainly choose them again if I want to go oversea again !
I get how joining an alliance would benefit Condor... but how would an alliance benefit from Condor joining?
Frankfurt is centrally located in Germany and most importantly has excellent rail connections. Condor and Lufthansa both sell rail connections and you can reach the majority of Germany within a few hours. There is no other airport in Germany that offers such strong rail connections. Condor can't leave Frankfurt.
I don't see any value in a being a weak second at FRA.
I would like for Condor, under IAG ownership and Oneworld, to shift its assets to and hub at Dusseldorf. Good business presence, large population and catchment area. DUS also also shown that it can sustain a hub before.
Outside of the existing Lufthansa hubs, DUS is the only airport in the Republic which could sustain a hub operation as it's got both lots of people in the catchment area (not just in NRW and Bremen, but all the way to at least Liege and Eindhoven) and, unlike Berlin, a substantial amount of traffic which is relatively price-insensitive (whether it's business travellers paying for business class to the USA or families prepared to shell...
Outside of the existing Lufthansa hubs, DUS is the only airport in the Republic which could sustain a hub operation as it's got both lots of people in the catchment area (not just in NRW and Bremen, but all the way to at least Liege and Eindhoven) and, unlike Berlin, a substantial amount of traffic which is relatively price-insensitive (whether it's business travellers paying for business class to the USA or families prepared to shell out hundreds for a Y flight timed to maximise time with the kids' grandparents in the Balkans/Turkey).
I would love to see Condor joining forces with LOT, but any sale to AFKL or IAG would be catastrophic for competition. Europe needs a fourth network carrier group in order to avoid ending up with a US-style cartel. If and when such a group gets formed, I am sure it'd be able to work within any of the alliances.
IAG interested in Condor?
Years ago, British Airways operated in Germany as Deutsche BA. It didn't work.
Moving to Berlin?
You have far more people(and richer people) living in driving distance to Frankfurt than you have around Berlin.
Berlin itself has 4million inhabitants but that is it pretty much.
Germanys population centers are in the south and west. And Frankfurt happens to be perfectly situated to capture both Baden Württemberg(the part that is not covered by Zurich) and North-Rhine Westphalia as well as obviously Hesse and Rheinland-Pfalz.
These...
Moving to Berlin?
You have far more people(and richer people) living in driving distance to Frankfurt than you have around Berlin.
Berlin itself has 4million inhabitants but that is it pretty much.
Germanys population centers are in the south and west. And Frankfurt happens to be perfectly situated to capture both Baden Württemberg(the part that is not covered by Zurich) and North-Rhine Westphalia as well as obviously Hesse and Rheinland-Pfalz.
These are some 40million inhabitants.
It could potentially make sense to establish a larger presence in say Stuttgart, but there you have Zurich as a major airport to the south and you would lose some traffic from North Rhine Westphalia.
I mean there is a reason why Berlin is no hub airport, apart from history and negligence by Lufthansa.
The south has both more people and offers higher yields thanks to business travel by Auto and machine industry as well as by finance in Frankfurt.
LH not flying from Berlin to any of London, Paris, Rome or Madrid has always struck me as odd.
When German civil servants need to go to those cities do they fly BA/Air France/Iberia?
Or Easyjet/Ryanair/Wizzair?
Or change in FRA/MUC?
They could fly private with government planes if enough people need to get there. Otherwise they are in principle allowed to fly with foreign airlines, but there is also Eurowings with a huge Berlin presence.
Changing in Frankfurt or Munich does happen as well, it really depends.
Eurowings also offer elite benefits to M&M status holders, so they're probably the most popular choice for those who travel with any frequency.
Surely with all the "Nett hier" stickers tourists should be flocking to Baden Württemberg by now!
While indeed the Ministry of Transport in Germany suggested that Condor or TUI should team-up with Oneworld or Skyteam to increase competition in Germany, i simply don't see why OW has to gain from buying Condor.
Condor doesn't have a strong domestic market and at its core is really just a leisure airline.
Well, AA could connect its passengers via Frankfurt to a bunch of holiday destinations but they would also do the same...
While indeed the Ministry of Transport in Germany suggested that Condor or TUI should team-up with Oneworld or Skyteam to increase competition in Germany, i simply don't see why OW has to gain from buying Condor.
Condor doesn't have a strong domestic market and at its core is really just a leisure airline.
Well, AA could connect its passengers via Frankfurt to a bunch of holiday destinations but they would also do the same through Iberia.
I'm struggling to see the benefit here. Condor would have to massively increase its domestic presence in Germany and say Zürich.
I fail to see the point of buying Condor instead of just opening new bases by the existing airlines within IAG where they make sense. Condor is very much a leisure/charter airline, whereas IAG needs a proper network carrier in continental Europe. So even if they buy Condor, they will need to completely restructure the network. So why pay for Condor instead of just opening the bases they need under the IB AOC?
While people generally do rarely travel to Germany .... germans travel a lot so that should work too.
"Could there be merit to Condor moving its hub to another German airport with less competition, near a larger population center, like Berlin, which has for years been sort of neglected by Lufthansa?"
That worked well for airberlin. Assuming they ever did that, what would they have to do to in order to avoid airberlin's fate?
@ Julia -- In fairness, part of airberlin's issue was actually that it couldn't fully expand to Berlin due to the delay with the new airport, and instead, most long haul service was out of Dusseldorf.
@Julia It was largely the fiasco delay of BER which killed airBerlin.
Remember that in 2012 the opening was pulled at only 4 weeks notice, and it took another 8 years to open.
TXL did not have the capacity for airBerlin to expand.
There is now plenty of capacity at BER.
I could see IAG owning Condor and operating them in a similar fashion to Aer Lingus or even Level. Maybe add a vueling hub in Frankfurt or operate out of a different airport like Aer Lingus’s Manchester transatlantic operations.
For example BER, DUS, HAM to JFK, LAX, MIA and SFO plus a Caribbean destination to cater to underserved large German cities.
Purchased a one way ticket two days in advanced for $200 from JFK to Germany last week. The a330 neo was a little tight but still great experience and connection easy in Frankfurt. While March is low season for Europe, that fare rivals the old Wow and Norwegian days (epically 2 days in advanced)…can’t imagine margins are great. Anyone who’d acquire them would likely just absorb the assets and reduce the competition, and my ability for cheap last minute trips :(
it appears this is just a speculative article rather than based on any news.
Condor's lack of being attractive to the alliances is that it is or was designed to be a low cost carrier. LCCs are less attractive to alliances.
Condor could change its business model.
and IAG or any alliance isn't going to help provide feed to Condor other than the flights which already exist and might provide additional connecting opportunities.
being...
it appears this is just a speculative article rather than based on any news.
Condor's lack of being attractive to the alliances is that it is or was designed to be a low cost carrier. LCCs are less attractive to alliances.
Condor could change its business model.
and IAG or any alliance isn't going to help provide feed to Condor other than the flights which already exist and might provide additional connecting opportunities.
being in an alliance could provide Condor w/ feed on its flights to other markets such as the US if they operate flights to/from alliance partner hubs.
I’d say that Condor’s business model is very similar to Aer Lingus. Would be a very good fit for an alliance.
Aer Lingus has no hometown longhaul competitor. Condor does.
ORD,
the same principle applies to SkyTeam as it does for IAG. Condor is still a low cost carrier that needs feed in Germany.
Getting feed on one of the flight from either AA or DL could help but that only helps on one end of the flight
again, this article seems nothing more than speculation on Ben's part.
Timbits, you're just miffed because Ben didn't recommend that Condor join DieTeam to have a huggy-wuggy fest with your beloved Delta.
They’re not, or were not, designed to be a LCC. They were designed to go to destinations that LH didn’t go to.
Their business class product is actually very good, beats most European, and all American competitors.
What they did do was rely on LH feeding them connecting traffic until the end of their days. That obviously changed.
I do believe that they could very well function similarly to EI.
Yes of course the article is speculation. It essentially says exactly that. It's musing on what a future takeover could look like. Hope that helps.
They could be acquainted by Lufthansa, your favorite airline!
How would this do anything to give Condor more feed at a German gateway, be it Frankfurt or some other airport? i dont think it would do a thing.
@ Jason -- It wouldn't give Condor more feed, but it would help the airline in many other ways. For one, the airline could get more passenger traffic due to being associated with an alliance. If part of a joint venture, Condor could also get more lucrative traffic. But more than anything, Condor being part of a larger airline group would allow the airline to develop a more cohesive strategy. At the moment, Condor is...
@ Jason -- It wouldn't give Condor more feed, but it would help the airline in many other ways. For one, the airline could get more passenger traffic due to being associated with an alliance. If part of a joint venture, Condor could also get more lucrative traffic. But more than anything, Condor being part of a larger airline group would allow the airline to develop a more cohesive strategy. At the moment, Condor is just kind of in limbo, as it continues to be reliant on Lufthansa, which isn't sustainable long term.
Where would this traffic come from? Even if it's part of one world or the joint venture between AA and BA, traffic isn't going to just magically appear. Not sure what you mean with that assertion.
The fact is, regardless of where they are in Germany, without fees from somebody, they won't have traffic just appear. It won't happen at Frankfurt, it won't happen at happen at Berlin, it won't happen at Düsseldorf, or anywhere else. That's just not how it works.
Does Germany allow foreign ownership? Could Alaska buy it?
Has to be majority owned and controlled by an EU entity.
Germany is a member state of the EU. Foreign ownership (e.g. Alaska) would generally mean a loss of EU traffic rights.