28 August 2008

The Germans Are Coming - Lock Up Your Beer

From the file called bizarre attempts at world domination. Lufthansa seems to be hell bent on putting its foot down as many places as possible. For now I think your daughters are safe.

At the risk of upsetting my German friends - the speed with which LH seems to be moving is almost frightening. The parallels of the 20th century are striking. Not content to acknowledge its bidding for Austrian, today LH is seen in talks with the parent of Brussels Airlines (what was once Belgium's national airline SABENA for whom this blog is so named) as reported by Bloomberg.

But not content with its international expansionist aspirations which seem to be insatiable (AirOne tie up, JetBlue investment and Swiss now a part of the group) at home it is making a play to mop up its domestic footprint.

It is buying out the rest of German Wings that it doesn't own and now this comes out:

Lufthansa said earlier today that it's in talks about a possible merger of its Germanwings discount affiliate with travel operator TUI AG's low-cost carrier TUIfly Germany and the Condor charter airline owned by TUI's largest competitor, Thomas Cook Group Plc. Lufthansa holds almost 25 percent of Condor.

Excuse me Sr Tajani (current EU Commissioner for Transportation) - are you paying attention or are you so consumed with rescuing your national airline that you don't care about the consolidation that is occurring.

1 comment:

Alexander von Koslowski said...

Well, we all knew it was happening.

Let us believe (just this once) that O`Leary was telling us the truth. When the smoke clears the only ones left in Europe will be Lufthansa, British Airways, KLM Air France and of course the Irish mixture of Ryanair and Aer Lingus.

After telling us that for years and getting applause from his (sometimes disbelieving) audience. What can we speculate it will be the right strategy to follow.

Is it buying the competitors, or should the competitors die to please Mr. Darwin?

I rather want to look at the history of Airlines emerging. Remember US Airways , a mixture of small Airlines and many hubs, very hard to manage. Well US Airways did not too well with all these cultures and elements

Do we think Lufthansa can buck history? For example, let’s look at all these Hubs Brussels, Frankfurt, Munich, Vienna and Zurich which could fit easily within the borders of one of the larger US States. If we are honest with ourselves and are asked about the Future of European Airlines sadly we need to all strongly believe in Darwinism and its resulting reduction in consumer choice.

Will it be manageable ? Lufthansa has – at least in the recent past and – we should note during good times - shown in Switzerland that it can work. BUT Austria and Belgium are very different. Let us not forget that Airlines still reflect a national pride, especially in these 2 countries especially if confronted by a large neighbor like Germany. We should not even think of Italy! (But if the Brits can give up their car manufacturing to the Japanese maybe these countries can give up some of their national icons too.

No, dear Professor, you did not upset me as a German. Clearing the market always means less completion in numbers, as long the competition is getting stronger, by fewer but healthier and prospering carriers, it might be a good thing.

I understand any raising concerns especially from overseas , that there is a misty and sometimes murky situation of relationships between Governments and Airlines, Protectionism is the most common suspicion, and I strongly believe we are right to be suspicious. Not just in these countries by well almost everywhere in the world as well. So here is a radical thought, why don`t we have an open sky across the planet, and why cannot anyone, anywhere own an airline, whether in the US or any other country in the world, abolish the need for traffic rights, forget those tons of regulation and get competition into the market. IATA has a program called simplify the business, which is trying to make Airlines behave like a normal Industry, like Textiles, or Cars. This would be the biggest and major step to create a global rational market.

I rather like the Idea , if manageable, to allow merges between Airlines rather to send them into bankruptcy. It is smoother for the employees and still some culture and spirit might live on.
I honestly believe, that the French and German culture in integrate companies is probably a little more sensitive than the Anglo-Saxon way, with all due respect.

Sincerely

Professor Alex