Wednesday, November 2, 2016

Air War Between Europe’s Legacy Carriers And Its Budget Airlines

Title: Europe’s Air Wars Rage as Ryanair Takes Fight to Lufthansa
By: ROBERT WALL. Nov. 2, 2016 9:12 1.m. ET
Blog post by: Angie De La Cruz

In recent years, European budget carriers like Ryanair and easyJet have upset the fragmented European airlines market. With their increasing sales and expanding presence, they have forced ticket prices down and have pressured bigger carriers like Lufthansa and British airways to compete with their own economy subsidiaries. According to the WSJ, Ryanair is currently battling Lufthansa for bragging rights to be Europe’s largest airline.  For many years, this Dublin based carrier, abstained themselves from big costly airports like Frankfurt. However in the recent years, they have turned their focus from low-cost, second-tier airports to Europe’s biggest hobs. In their latest news, Ryanair said it would base two of its single aisle planes at Frankfurt and will expect to carry 400,000 passengers a year from this new base. This decision has had a great impact in the decades-old fight between the continent’s budget carriers and its traditional airlines.

Although in the recent years, they have suffered from a series of disruptive strikes, and the corporate fallout from the deadly Germanwings crash in 2015, Lufthansa’s response has been to fight back. This past Wednesday, they announced their plans to introduce used planes to lower cots rather than buying new small jets.  They also said that Eurowings, their budget unit, could start flying from Frankfurt to compete directly with Ryanair. According to Carsten Spohr, Lufthansa’s CEO, Ryanair’s arrival to Frankfurt will help lower the airport costs, which will hence benefit them.  The intensifying competition comes at an unstable moment for European airlines where there has been a decrease in demand resulted from the repeated air-traffic control strikes, thousands of canceled flights, and ongoing terrorist attacks.

Without doubt these are hard times for the European Airline Industry. When it comes to global marketing initiatives, competition and external environmental factors both play a key role. It is a challenge for companies like Lufthansa to have to confront these two critical threats at the same time. Moreover, uncontrollable factors such as the terrorist attacks and the decrease in price due to competitive moves. Lufthansa’s recent announcements evidence the company’s flexibility and willingness to adapt to new scenarios and solutions in order to maintain competitive. Cant wait to see what other marketing strategies they will implement in the near future to keep fighting back and get ahead in the game. 

1 comment:

  1. Hopefully, the consumers will benefit from a fight like this, with better service and lower prices. We've seen this kind of activity in the US for years, with United (Continental), Delta, US Airways and American--but with small groups, like Spirit, coming out with incredibly competitive prices, we've seen a little bit of a shift. I wonder if the next steps will be for more global instead of regional competition.