For a while, transatlantic low cost airlines were in vogue. The sole focus of most of these airlines seemed to be gaining market share, regardless of the fact that they are actually profitable.
However, as financing for airlines becomes increasingly difficult, we have seen a reversal of this situation. WOW Air and Primera Air have ceased their business while Norwegian struggles to stay alive.
WOW Air A321 after the liquidation
It is interesting to see what strategies the great Europeans are pursuing. "Airlines take. For example, Air France has launched the low-cost airline Joon, although the airline will be discontinued this year.
The Lufthansa Group now has Eurowings and it looks like they are now changing their strategy accordingly. The Lufthansa Group warned of "price erosion in Europe caused by market overcapacity and aggressively growing low-cost competitors".
The Lufthansa Group & Eurowings
The Lufthansa Group consists of Lufthansa, Swiss, Austrian, Brussels Airlines and Eurowings. At the beginning of last year, the Lufthansa Group had a surprising strategy for Brussels Airlines – they wanted to fully integrate Brussels Airlines into Eurowings.
In other words, they wanted to make Brussels Airlines a full-fledged low cost carrier, not to mention that they were destroying any brand awareness related to the airline.
You might think that some people are proud of Brussels Airlines to lose the national identity of the airline and instead integrate it into the same airline operating ultra-low-cost recreational routes from Germany seemed strange to me.
Brussels Airlines A330
Lufthansa Group withdraws plans from Brussels Airlines
Lufthansa has just reached 180 when it comes to its Eurowings strategy. So far again:
- Eurowings operated short- and long-haul flights
- Brussels Airlines should be integrated into Eurowings for both short-haul and long-haul flights.
The Lufthansa Group has changed its mind plans to maintain the Brussels Airlines brand . In addition, they plan to completely eliminate Eurowings on long-haul flights and instead operate only Eurowings as a short-haul brand.
With this new strategy:
- Eurowings will operate exclusively A320 point-to-point short-haul flights
- All long-haul flights will be transmitted to the network carriers (Austrian, Brussels, Lufthansa and Swiss).
- Eurowings will achieve a 15% reduction in unit costs by 2022. This will be done by combining more efficient aircraft and reducing staff costs (which can not be good news).
- Brussels Airlines will be more closely aligned with the other network carriers of the Lufthansa Group, so we could see that they have a higher premium
It is interesting to note that there has recently been talk of Lufthansa may acquire Condor.
We see a very real shift of the industry away from long-distance low-cost airlines in Europe. This is simply because there is too much capacity and prices have come under massive pressure. Network airlines have the advantage that they also receive high-margin traffic from business travelers, which makes it extremely difficult for ultra-low-cost carriers to compete. I am glad that they have reversed their decision.
But it's interesting to see that Lufthansa goes one step further and completely eliminates its low-cost carrier for long-haul flights. Air France did the same and at this point only the IAG has a low-cost long-haul airline (LEVEL).
What are you doing? the Eurowings decision of Lufthansa?