Lufthansa's general manager, Carsten Spohr, today wrote controversial comments about low-cost fees charged by some major European carriers with low costs.
Lufthansa's problems with cheap tariffs
Spohr said that airlines selling flights for less than 10 EUR (~ 11 USD) are "economically, ecologically and politically irresponsible." He said that "flights for less than EUR 10 should not exist".
No wonder Spohr has motivation for what he says – Ryanair and EasyJet grow significantly in Germany and sell very cheap tickets there. Spohr says that "nobody will push us out of our home markets" and that "the price war also leaves us".
He also states that Ryanair and EasyJet are "losing huge sums of money" trying to increase their market share in Germany. The impact was so noticeable that Lufthansa's profit forecast was downgraded.
Rather conveniently, it all happens when the low cost of Lufthansa Eurowings is restructured and I guess it is not unrelated to EasyJet and Ryanair.
My view of Spohr's comments
Spohr's comments are both scandalous and selfish, in my opinion, and constitute one of the most stupid ways Lufthansa attacked its competitors at very low costs (and tried many methods).
Is selling cheap tariffs irresponsible economically, ecologically and politically?
Maybe we were looking for various annual reports, but both EasyJet and Ryanair are extremely profitable. They just have a different way of selling tickets than Lufthansa, and it should be perfectly right.
Most people do not actually pay 10 euros per lot – they can pay for space, bags, beer, lottery cards, etc. A business model works for them.
If his suggestion is that airlines do not earn money as the market share in Germany increases, is not this the case for many airlines? Usually, routes are not profitable from the first day for airlines – increasing the market share takes some time, and this is something that Lufthansa should know about here.
For me, this is the most interesting point. It can not be denied that travel has become more accessible around the world due to the very low cost of carriers, and many are now wondering whether it is good or not.
Governments are increasingly trying to reduce emissions from airlines, and KLM encourages people to fly, times are different than in the past.
But it seems that Lufthansa is in the position that the right way to reduce emissions is to eliminate cheap ways of flying? It's convenient. Where does their campaign encourage business class passengers to fully organize an e-meeting instead of flying face to face?
Ironically, Ryanair has a much more economical short-haul fleet than Lufthansa (they only operate on 737 aircraft, which are less than eight years on average, while Lufthansa serves all types of aircraft, many of which have a higher cost per seat), so Ryanair has Passenger emissions are lower.
I'm not 100% sure what Spohr refers to. My guess is that it refers to how EasyJet and Ryanair have some creative ways in which they set up their business to reduce costs. If this is the case, there are many airlines in which this is happening, and it is said that it separates them only after expansion in Germany.
In my opinion, Spohr has no basis in his comments. For so long Lufthansa took the Germans for granted, and now EasyJet and Ryanair finally give them some competition on short-haul flights.
There is nothing irresponsible from an economic point of view, because airlines selling cheap flights are profitable.
When it comes to ecological responsibility, there is no doubt that we see a tendency to reduce emissions, but I do not think that cheap tickets are a problem. A person paying 10 EUR for Ryanair is also entitled to a flight, like someone who pays 60 EUR for a Lufthansa flight, in my opinion.
What are you doing with Spohr's comments? Are airlines not responsible for selling super cheap tickets?
(Tip to Niko_jas)