Can Lufthansa Go Low-Cost?

For well over a decade now, in the European air travel market the “legacy” airlines that everyone was used to from the past have been struggling to compete with low-cost carriers who have been able to offer substantially lower prices in return for a substantially lower level of service. The latter service has nonetheless consistently remained tolerable enough for cost-conscious travelers to keep purchasing tickets in droves (although recent developments suggest that things might be starting to go a bit too far).

Now an interesting article in the German news-magazine Focus (Advantageous – but not cheap) tells of a new plan for fighting back from the German flag carrier (although it is no longer publicly-owned) Lufthansa. In the main, this scheme calls for combining 133 of Lufthansa’s European flights with 150 flights from its Germanwing subsidiary into a new airline, provisionally called (within internal Lufthansa documents) “Direct4you.”

One truly hopes that they can come up with a better name than that prior to the planned launch next January. (Or perhaps just decide to go whole-hog with the text-speak and call it “Direct4U.”) Otherwise, the airline has been busy re-training its personnel in the whole low-cost template, something by now familiar to all within the industry: things like equipment standardization, more efficient jet turn-around, a simplified (and no longer free) on-board food & drink menu – and employees who are paid less, when they are not themselves lower-paid outsourced workers. One might also want to ask what happened with Germanwings itself, since that was supposed to be the low-cost airline that would save Lufthansa, back when it bought Germanwings at the beginning of 2009. Well, apparently that alone did not work, because the mother company is still in trouble, steadily recording financial losses, so that it has to try again, this time introducing cost-cutting techniques and procedures more thoroughly.

The problem is that this sort of thing does truly involve destroying much of the legacy of how the company has done business in the past, in order to try and save its future. This includes those past wage agreements, and in Germany overturning those is sure to be a tall order. Already the spokesman for the cabin personnel’s union is warning that this cannot work. We will be able to see shortly whether he is right.

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