Lufthansa Goes Back to Its Happy Place By Starting a New Airline For No Good Reason

Lufthansa

If there’s anything the Lufthansa Group loves, it’s complexity. The group has been fanatical about making things as confusing as possible from an operational perspective, and it has been quite successful. After finally clearing out some of the weeds, Lufthansa has apparently decided it over-simplified. Get ready for Ocean, a new low-cost airline in the group, but one that won’t actually fly under its own name… I think.

To understand why Lufthansa wants Ocean to exist, we have to look at all the other ridiculousness that has existed in this group before.

Eurowings was created to be the group’s short-haul low-cost carrier, but things quickly spiraled out of control. Lufthansa just kept throwing things under the Eurowings brand until it realized it had created a money-losing monster. For short-haul, it had four airlines operating under the Eurowings brand in Germany alone. It also had two long-haul airlines — SunExpress Deutschland (not to be confused with the related SunExpress in Turkey) and Brussels Airlines — that were flying for Eurowings.

In the short-haul world, Eurowings is paring back to have just Eurowings Europe flying outside of Germany and either Eurowings DE or Germanwings operating in Germany — one will be announced the winner after a steel cage match. For long-haul, well, we know that SunExpress Deutschland is being dissolved and Brussels is being separated from Eurowings so it can just focus on its own flying from Belgium. That should mean that Eurowings stops flying long-haul, but, well, Eurowings is still selling flights operated by SunExpress Deutschland well into next year. So… your guess is as good as mine whether Eurowings will in fact stop this.

What we do know is that out of the ashes here, Lufthansa still won’t give up on low-cost, long-haul for some unknown reason. It seems like the latest plan is to combine the idea behind two non-Eurowings operations that it owns (yes, there are more) to create a new option. Those two? Well, there’s Jump and there’s Edelweiss.

Jump isn’t really anything but a union-busting tactic. It was a concept developed to fly long-haul under the Lufthansa brand with more dense aircraft and cheaper crew operated by a subsidiary. It ended up that the airline chose three tired, old A340-300s to pack full of seats and send to Lufthansa Cityline to operate under the Lufthansa brand. In other words, it was Joon without the rooftop lounge or any other attempt at branding whatsoever.

That idea was better than Joon, but it was basically flying widebodies under a regional-style agreement just to save money. A deal with the unions ended up phasing that out. But here we are again with a new labor-busting plan to do the same thing… but also short-haul, it seems. Somebody please make it stop.

The new plan is to base this around Edelweiss, the leisure airline that SWISS acquired years ago. Edelweiss today flies 10 A320s on short-hops plus 2 A330-300s and 4 A340-300s on long-haul flights, all out of Zurich. It flies to leisure destinations all around the world. It often sells flights under the SWISS brand, but you can also buy direct from Edelweiss. Lufthansa said that it is basing Ocean off Edelweiss, but it also said it won’t operate under its own brand which would be different than Edelweiss. So, who knows what will happen.

But back to the point, if you buy from SWISS, the integration with Edelweiss is not particularly good. You must go direct to Edelweiss to get seat assignments after finding your Edelweiss confirmation number. So, let’s hope this Ocean integration is at least better.

Now, why does Lufthansa need a new airline to achieve this? I have no idea so it’s probably just another swing at labor. The goal is to have Ocean flying short- and long-haul under the Lufthansa brand out of Frankfurt and Munich. Why will Ocean fly short-haul when Eurowings can do it? Why do you ask so many questions?! Here’s my best guess. In an interview with FlightGlobal, Lufthansa said this would fit into the “quality leisure segment.” I’ll assume that means Eurowings is in the “not quality leisure segment.”

On the long-haul, Edelweiss generally flies a leisure-heavy configuration. For example, on the A340, SWISS has 8 First, 47 Business, and 168 Coach. Meanwhile, Edelweiss has 27 Business, 76 Extra Legroom Coach, and 211 Coach. That’s right, it has 40 percent more seats on the same airplane, primarily becaues premium cabins take up so much room on SWISS. Of course, you don’t need a separate airline just to fly a different configuration. Again, this sounds like a labor cost-saving play, but that has never worked before, so why try again? I still don’t know.

It seems to me someone looked at Edelweiss — a leisure airline that was acquired and kept separate, mind you — and said “hey, that actually makes money. We should just make one of those in Germany.” And by “one of those,” I mean a company that doesn’t bleed red ink everywhere. Good luck with that.

I can’t explain how this will be any different than the past 50 attempts, but you can bet it’ll happen. There’s nothing too complicated for Lufthansa Group.

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13 comments on “Lufthansa Goes Back to Its Happy Place By Starting a New Airline For No Good Reason

  1. It’s also worth noting that Lufthansa owns SWISS.

    The maze of different legal entities and brands in Lufthansa Group must drive their legal and marketing teams nuts, even if it probably keeps many of them employed trying to sort it all out.

    1. And some here hinted on Tuesday that US airlines were essentially a zombie jobs program. LH Group response, hold my beers.

      Love the artwork on this post. It reminds me of Gene Wilder as he said in Young Frankenstein… ALIVE, IT’S ALIVE, IT’S ALIVE! One of the best comedy films ever made.

  2. Is this really an August 2020 post? Why would LH be creating anything new at this time? Maybe all the free time since they aren’t doing as much flying.

  3. “Quality leisure segment” ? What does that mean? And this really looks and sounds like the classic definition of insanity.

  4. This is squarely aimed at Condor. The aborted sale of Condor to LOT last year made Lufthansa realise that, where Condor to fall into the wrong hands, LH could be facing a serious problem. Condor in Frankfurt is larger than Virgin Atlantic in London. It’s a bit smaller in Munich, but you get the picture. You could do some serious damage with that. And LH has been eyeing the German leisure market, green with envy, for years. Edelweiss has been a success in Switzerland and they think they can replicate that in Germany. Of course, no meaningful competition helped Edelweiss a lot. Dislodging Condor, on the other hand, is not going to be a walk in the park. In terms of brand strength, they blow Lufthansa out the water. It’s a bit like Alaska in the Pacific Northwest! Were I a betting man, I would put money on this ending in tears.

    1. This seems like a reasonable (and probable) answer. Question though: why [do you think] Lufthansa has been eyeing the German leisure market for years? I was under the impression that leisure flying is consistently less valuable than business (or mainline) flying. Not that business or mainline are necessarily the same thing. And I recognize that the German (and/or European) leisure market might be different than the broader leisure market.

  5. The only way to stop all of this is for people to stop applying for jobs with lower pay. If LH starts a new airline with lower paying jobs and no one applies then it isn’t going to go anywhere. Instead people apply for the jobs and then complain about lower wages.

    Maybe if they reduced management and bonuses and stock options they wouldn’t constantly have to resort to such gimmicks.

    1. True but to most people low pay is better than no pay!

      With tens of thousands of furloughs coming soon, they probably think now is a good time.

  6. What a great article! Everything is absolutely right!
    Why, because with an executive Bord like LH’s you can not expect anything else. They all need their own airlines , they all have no idea about low cost airlines, as every single person in a leading position comes from network airlines or consulting companies.
    So, what ever they have tried so far, no success! And every single AOC has there own overhead costs! Great!
    Very sad!
    Like many other mistakes.
    Look at the fleet they have , lots and lots of costly four engine aircraft! The 777 exists since 25 years! I am quite sure, the airline would have had much more cash now, using twins instead of the big ones….. But prestige is more than making money!!!
    The wall gets nearer and nearer….. And LH is heading for it!

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