Lufthansa CEO Carsten Spohr has today made controversial comments about the cheap fares charged by some of the carrier's leading European competitors, ultra low cost.
Lufthansa problems with cheap fares
Spohr said that airlines selling flights for less than EUR 10 (~ US $ 11) are "irresponsible economically, environmentally and politically". He said that "flights for less than EUR 10 should not exist".
It's no surprise that Spohr is motivated by what he said – Ryanair and EasyJet have grown significantly in Germany and are selling very cheap tickets from there. Spohr says that "nobody will push us out of our national markets" and that "the price war also leaves traces of us".
He also said that Ryanair and EasyJet "lose a huge amount of money" as they try to increase their market share in Germany. The impact of this situation has been felt so strongly that Lufthansa has lowered its profit forecasts.
All of this is quite practical as the Lufthansa Eurowings low-cost division is being restructured and I guess it's not unrelated to EasyJet and Ryanair.
My opinion on Spohr's comments
Spohr's comments are both scandalous and selfish. This is one of the most devious ways that I have seen Lufthansa attacking its competitors at very low cost (and they have tried a lot of methods).
Is the sale of cheap tickets irresponsible economically, environmentally and politically?
Maybe we have looked at different annual reports, but EasyJet and Ryanair are exceptionally profitable. They just have a different way of selling tickets than Lufthansa, and that should be fine.
Most people do not actually pay 10 euros to travel – they can pay for seats, bags, beer, lottery cards, etc. And the business model works for them.
If his suggestion is that airlines do not make money as they gain market share in Germany, is this not the case for many airlines? Links are generally not profitable from the first day for airlines – it takes time to increase market share, and Lufthansa should be aware of this.
For me, it's the most interesting point. It can not be denied that travel has become much more accessible around the world thanks to very low cost carriers, and nowadays there is a lot of debate about whether it is a good thing or not. no.
As governments increasingly try to reduce airline emissions and KLM even encourages people not to fly, the times are different from those of the past.
But Lufthansa seems to take the position that the right way to reduce emissions is to eliminate cheap flights. It's practical. Where does their campaign encourage full-fare business class passengers to organize an electronic meeting instead of flying for a face-to-face meeting?
Ironically, Ryanair has a much more fuel-efficient short-haul fleet than Lufthansa (it operates exclusively 737s under the age of eight on average, while Lufthansa operates all kinds of aircraft, many of which have a higher cost per seat. high). the emissions per passenger are lower.
I am not 100% sure of what Spohr is referring to. I guess it refers to how EasyJet and Ryanair creatively design their business to reduce their costs. If this is the case, there are many airlines in which this is the case, and it is said that it selects them only after their expansion into Germany.
In my opinion, Spohr is outside the base with his comments. Lufthansa has long taken Germany for granted, and EasyJet and Ryanair are finally offering them some competition on short-haul flights.
There is nothing economically irresponsible about this because airlines that sell cheap flights are profitable.
With respect to environmental responsibility, it is clear that we are seeing a trend towards reducing emissions, but I do not think the problem is in the low-priced tickets. A person who pays EUR 10 to steal Ryanair has just as much the right to fly as someone who pays EUR 60 to fly Lufthansa, in my opinion.
What do you do with Spohr's comments? Is it irresponsible for airlines to sell super cheap tickets?
(Hat tip to Niko_jas)