Lufthansa Plots Long-Haul Budget Expansion to Counter Rivals
Deutsche Lufthansa AG wants to add long-distance airplanes to its low-cost Eurowings arm as competition for discount travelers from Europe to the Americas intensifies.
“We need aircraft beyond the seven we have,” Lufthansa Chief Executive Officer Carsten Spohr said at an aviation event on Thursday, referring to the Airbus A330s based in Cologne that Eurowings uses for inter-continental leisure flights. Berlin, Hamburg and Dusseldorf would make “interesting” expansions, he said.
Europe’s large network carriers are adding low-cost subsidiaries to ferry tourists around the world and defend themselves against long-distance competition from no-frills challengers including Norwegian Air Shuttle ASA. Lufthansa’s Eurowings has been serving about a dozen mainly sun-and-beach destinations since December 2015, with Air France and British Airways owner IAG SA working to launch similar services.
“IAG and Air France, they are copying our model,” Spohr said, referring to IAG’s new airline Level and Air France’s plans to start Boost.
Level will begin offering cut-price inter-continental flights from June and could eventually operate more than 30 aircraft, IAG said earlier this month. The startup will initially connect Barcelona with destinations in the Americas including Los Angeles, Oakland, Buenos Aires and Punta Cana in the Dominican Republic with tickets as cheap as 99 euros ($106) each way. Air France-KLM Group is setting up Boost after revealing that its French mainline division is losing money on 35 percent of its routes.
While long-haul traffic has been dominated by wide-body jets including Airbus’s A330, new single-aisle jets with longer ranges are making it easier for carriers to reduce costs on less-traveled routes across the Atlantic and to Asia. Norwegian, which has been operating discounted trips to the U.S. on widebody Boeing 787s since 2013, will start narrow-body flights across the Atlantic in June.
Iceland’s Wow Air Ehf on Thursday said it will more than double its fleet of wide-body jets as the niche player expands its model to connect Europe and the U.S. at rock-bottom prices with stopovers in Reykjavik.
News by Bloomberg, edited by Hospitality Ireland