Lufthansa Five Point Plan Will Give Cologne Airport a Welcome Boost

Despite them still sitting in the middle of the upcoming 10th pilot’s strike which will start tonight, Lufthansa’s Board of Directors at their meeting today in Frankfurt signed off on a new “five point” plan which basically leads to a splitting of the organization into a “Premium Product” and a “No Frills Product.” The decision can be classified as a revolution in the long history of the carrier.

Image of future Eurowings A330-200. The leased fleet will successively by upped to seven units and be based in Cologne  /  source: LH
Image of future Eurowings A330-200. The leased fleet will successively by upped to seven units and be based in Cologne / source: LH

Although this new direction decided on by the Board has only indirectly to do with air cargo, we feel it is worthwhile making note of it as when it is accomplished, it will be the start of a altogether new Lufthansa.
CargoForwarder Global plans to report in detail in its 8. December issue on where all of this might lead to for LH, including its cargo arm, in the future.

The five main points
The five far reaching issues discussed and agreed upon today are:

  • Focus on 2015 as the year of the new Lufthansa Premium Product
  • Setting up new European and Intercontinental sectors under the “Eurowings” flag with additional lease in of up to seven Airbus A330-200 aircraft
  • Signing of a “Letter of Intent” with SunExpress for operation of Eurowings long haul routes
  • Strengthening of the worldwide sales and marketing structure of the alliance carriers
  • “Earnings After Cost of Capital” to replace “Cash Added Value”

Here are just the three main decisions reached:

Premium Product enhancement
This will be centered mainly around the cabin modernization of the long haul fleet to bring service in all classes up to what the LH managers claim will be a five star level.
A new First Class which will be added by the end of the first quarter of 2015.
The end of the second quarter will see the installation of yet another new Business Class.
And finally - the completion of the Premium Economy Class on all long haul aircraft by the end of the third quarter.
On top of this the German national carrier will receive a further two Airbus A380s, four Boeing 747-8s and ten Airbus A320 aircraft.
And - believe it or not - one more Boeing 777 Freighter, bringing the total in service to five aircraft.
Quite some investment in order to enhance the Premium Product which is geared towards combating competition from the Gulf carriers.

No Frills - or “Wing Concept”
This is really what it’s all about!
The LH managers have been busy with what they see as a necessary restructuring of the airline in order to remain competitive in both the high class and no frills markets.
This includes of course, trying to come to terms with the pilots union on pay conditions and retirement benefits.
The tenth pilots strike will start in a few hours and hopefully today’s notification will not pour more oil onto the fire.

Lufthansa’s Helmsman Carsten Spohr
Lufthansa’s Helmsman Carsten Spohr

A new low cost intercontinental arm will be brought to life with the lease in of up to seven Airbus A330-200 passenger aircraft.
On top of that, the LH managers press ahead with their plans to pull more and more of their European sectors presently operated under the Eurowings and Germanwings flags into a separate Eurowings product.
This, in their view, is essential for Lufthansa to remain competitive on the European short and medium haul markets.
Hence the name – “Wings Concept.”

 

New long-haul from Cologne
The carrier will introduce its new long haul routes using the new A330-200 fleet from Cologne-Bonn airport and (among others) primarily operate to destinations in Florida, the Indian Ocean and Southern Africa.
In order to set up this cost effective new no frills carrier the LH managers have agreed in the form of a Letter of Intent with SunExpress, the 50/50 Lufthansa - Turkish Airlines short-haul leisure carrier, on a Joint Venture whereby the new intercontinental flights will be operated as Eurowings flights under the German AOC (Air Operator Certificate) of SunExpress Deutschland and this means that cockpit and cabin crews will be supplied by SunExpress.
This will effectively ensure that no new tariff agreement will have to be reached between Lufthansa and its pilots union.

Cologne airport turns out to be the winner in this restructuring
A concentration of short and medium-haul flights as well as the start up of a new long-haul hub will bring the airport much needed new business.
Also on the cargo side.
Seven A330s plying routes into the above mentioned destinations will allow for added belly capacity for the carriage of cargo.
The aircraft can at best carry up to 15 tons of belly cargo, but realistically speaking, on those routes planned, probably up to a maximum of ten tons per sector, mainly due to sector payload restrictions. That - however is a lot of cargo on a yearly basis and sure a boost for CGN’s cargo department.

Decidedly a new direction for Lufthansa.
A move finally made in order to position the carrier competitively in the future on both premium and low cost aviation sectors.
A must! - if Lufthansa wants to stay among the world leaders.
It can only be hoped that all of its staff members stand firmly behind this new direction and give the necessary impetus to bring it off.

More next week once we’ve had the chance to look into this.

John Mc Donagh

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