Lufthansa will create budget brand to cut costs in Europe

19 Sep 2012 by Tom Otley

In a bid to save money on its short-haul routes, German airline Lufthansa will unveil a new budget airline with effect from January 1 next year.

At a meeting of the carrier’s Board of Directors today (September 19) it was decided to create a new budget brand which would take over operation of all Lufthansa domestic and European routes with the exception of those services which connect with the carriers twin hubs of Frankfurt and Munich.

It means that the carrier’s current budget airline, Germanwings, will be absorbed into the new entity which is set to carry 18 million passengers a year.

According to reports on Reuters a decision on what to call the new budget operation will be made within the coming months. And there are as yet no details of what in-flight service passengers may receive. Neither is there any indication of what fares or (perhaps) ancillary fees passengers may have to pay.

Typical routes from the UK over which the new low-cost carrier will operate include: London to Cologne, Dusseldorf, Hamburg and Stuttgart along with Birmingham and Manchester to Berlin. Lufthansa is currently engaged in a huge cost-cutting programme which has identified savings of over €1 billion.

As has already reported, Lufthansa is set to axe its Munich-Singapore-Jakarta service and is currently examining the viability of operating to Bangkok. In the case of the UK, Lufthansa has or is about to cancel routes such as London Gatwick-Frankfurt and London City-Munich.

As reported above, services into Frankfurt and Munich will not form part of the new budget carrier’s network. That is because they are considered feeder services and, naturally, Lufthansa would want to give a good impression to connecting passengers, some of whom may have paid large sums of money for their first and business class long-haul tickets.

Other European carriers have also attempted to cut costs by forming low-cost offshoots, witness Cityjet of Air France, KLM’s Cityhopper and BA’s Cityflyer.

The difference is that not only do the above-named airlines act as conventional carriers (providing passengers with free snacks, drinks and baggage check) but in addition Lufthansa has a broader European network and so this decision to create a new budget brand will have a bigger impact on passengers.

What Lufthansa will action from next January is sure to change the short-haul business models currently being operated by its rivals as all airlines are keen to keep operating costs as low as possible.

Rest assured that will update readers will developments as and when they are known.


Alex McWhirter

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