Travellers praise Eurowings, Lufthansa’s budget subsidiary, for its service and reliability.
By that I refer to the product offered by other low-cost carriers (LCCs) such as Ryanair, Easyjet and Wizzair.
LCCs are hard-nosed businesses. Passengers can and do grumble about the lack of services but in truth these all cost money and this adds to operating costs.
In truth the latter determine whether or not a LCC can prosper.
That’s the situation in which Eurowings finds itself in. Lufthansa Group is displeased with Eurowings’ financial performance and at today’s Capital Markets Day a turnaround plan has been announced.
Many details were not made available. But from the consumer viewpoint we can expect the following changes at Eurowings in the coming months.
- Eurowings will focus on short-haul, point-to-point operations.
- Eurowings long-haul operations will now be transferred to the Network Airlines.
What does that mean in simple terms? Currently Eurowings has quasi-interlining both with its own services and with selected other carriers. It’s a useful facility for passengers but it costs money and it now appears this service will be dropped.
Of equal concern is Eurowings’ withdrawal from long-haul services.
As Business Traveller has reported in the past, Eurowings flies long-haul to places as varied as Thailand and the USA.
These routes are ones which Lufthansa mainline would have operated previously but which it [Lufthansa mainline] had transferred to Eurowings in a cost-saving move.
Indeed only a few months ago we reported that Munich-Bangkok was being transferred to Eurowings.
Lufthansa mainline operates only at Frankfurt and Munich. Both short- and long-haul services from other German cities are operated by Eurowings.
It remains unclear whether some of these Eurowings routes will be transferred in future to mainline or to other Network Airlines: Austrian Airlines, Swiss and Brussels Airlines.
Lufthansa said that it intends to use innovations in sales and distribution to reduce costs.
We recently reported that Eurowings Smart fare passengers would lose their catering offer.
Update: It’s reported by financial publication Wiwo.de that CEO Thorsten Dirks expects a bigger loss at Eurowings for 2019 (in 2018 it had a loss of €231 million).
Each of its 40 million passengers annually will be paying on average four Euros less per ticket.
Dirks says he wants to cut costs by 25 per cent by 2022. Part of the savings come from making staff and planes work harder. In other words Eurowings’ fleet will be in the air for longer than today. Staff will work on average one hour more per day.
Eurowings will concentrate on high revenue routes out of cities such as Cologne, Dusseldorf, Hamburg and Stuttgart.
Dirks said he wanted to be more like Ryanair and Easyjet, with a greater emphasis on ancillary fees. He wants to make the website more like a department store.
I suspect many readers will be disappointed with the latter. But as I noted in our news piece, LCCs are hard-nosed businesses.
As we have seen over the years, only those with the lowest cost structures will survive.