Lufthansa considers expanding LCC long-haul offering

13 Aug 2014 by Clement Huang

As reported previously by Business Traveller Asia-Pacific (see here), the German flag carrier first announced plans to launch a long-haul LCC arm last month at the Farnborough Airshow.

However, industry experts are sceptical about the profitability of long-haul LCCs. History’s shown that flights lasting over eight hours are a “no go” area for low-cost models. For a detailed report on this, please check the December 2013 issue of Business Traveller Asia-Pacific for “The long game”. To subscribe, click here

Lufthansa, however, remains set on initiating its LCC soonest. According to a report by the Financial Times, Lufthansa’s chief executive Carsten Spohr believes that the airline will succeed where others have failed.

Why? For once, LH has terminated several services to a number of Asian destinations over the past few years. Guangzhou, Calcutta and Hyderabad were all axed because of stymied travel demand vs. high operating costs. Lufthansa may now reopen the routes under the envisioned ‘long and thin’ low-cost model.

By initially using Boeing 767s or Airbus A330s for its no-frills services, Spohr wants Lufthansa to adopt a “low-risk and fast approach” business model not at first reliant on new aircraft orders and deliveries.

“I want to be in the air by next fall. If it works we’ll be rolling it over into A350s or 787s and we probably won’t stop at seven planes either,” said Spohr.

Lufthansa’s planned long-haul LCC is being closely watched by analysts, as many believe there is a risk the no-frills offering might cannibalise the airline’s own economy long-haul business. To counter this, however, Lufthansa has already announced it will substantially upgrade its mainline cabin products over the next months and years to come.

In response to Lufthansa’s long-haul LCC ambitions, AirAsia chief executive Tony Fernandes was previously quoted by Reuters as saying: “I know why they want to do it but it’s dangerous to have a low-cost and a full-service carrier in the same group because invariably you compete with each other”.

Lufthansa’s new long-haul LCC is slated to begin operations by fall 2015.

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Clement Huang

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