Lufthansa’s Confusing Low-Cost Journey Goes In Circles Once Again

Eurowings, Lufthansa

Six months ago, Lufthansa Group puzzlingly announced that it would create a new airline to act as its long-haul, low-cost operation. With a project codename of “Ocean,” the new airline was simply expected to be a lower-cost platform that would operate under existing brands. Apparently that’s no longer the case. Ocean is now going to become a new brand called Eurowings Discover. This seems entirely unnecessary, but it’s Lufthansa, so it’s in no way surprising.

I went through much of Lufthansa Group’s tortured history with low-cost operators in my post from last year, so today I’ll just focus on where everything stands within the group right now. Then we can talk about how Eurowings Discover fits into this.

The Network Airline Group

Within Lufthansa Group, there are four primary network airlines. Lufthansa is the largest of them, with primary hubs in Frankfurt and Munich. SWISS has its main hub in Zurich with a secondary operation in Geneva. Austrian hubs in Vienna while Brussels Airlines hubs in… Brussels. Those are the traditional, hub-and-spoke airlines that probably are only different brands because of weird cross-border rules and national pride. This doesn’t sound overly complex until you start to get below the surface and into the low-cost arm.

Under Lufthansa, there are two regional airlines that are owned by Lufthansa Group. First is Lufthansa Cityline which was primarily a CRJ-900 operator along with some Embraer 190/195s that fed Lufthansa in Frankfurt and Munich. It has been on quite the roller coaster. It received A340s to fly under the Lufthansa name for cheap, but that ended quickly after negotiations with Lufthansa pilots produced results. It did, however, started flying A319s under the Lufthansa name on some pretty big routes, like Berlin to Munich. It acts as a “tweener” of sorts between regional and mainline.

Including parked aircraft, Lufthansa Cityline today appears to have 35 CRJ-900s, 9 Embraer 190s, 2 Embraer 195s, and 5 A319s. I believe those Embraers may be headed toward Air Dolomiti, which is the other regional player.

Air Dolomiti has 15 Embraer 195s that it runs from Frankfurt and Munich to Italy. The airline is actually based in Italy, and it flies under its own brand with codeshares by Lufthansa. So, it is a little different. I’ve always assume this airline continues to exist because Italy wants a homegrown airline for some reason instead of just having Cityline do the flying, but I don’t actually know that for sure.

After years of shenanigans to skirt labor agreements with weird subsidiaries like SWISS Global and Tyrolean, the rest of the group is now fairly normal. Helvetic flies flights on behalf of SWISS, but the airline isn’t owned by Lufthansa Group. Everyone else on the network side flies their own airplanes. Go figure.

The Random Grouping of Low Cost Operations

The low cost side has been much less settled. Today, Lufthansa Group is down to only two primary low-cost brands flown by 3ish airlines.

First is the mighty Eurowings. After years of going around in circles surrounding a low-cost strategy, Lufthansa Group decided in 2020 it was time to slash and burn by ditching LGW and Germanwings alongside a host of confusing wet lease operators. Now there are only two primary operating carriers. Eurowings itself flies most German routes while Eurowings Europe was supposed to be more about the Vienna operation. These days, however, it looks to be flying entirely out of Dusseldorf. I don’t know what that’s all about. Eurowings also seems to still fly airplanes for other airlines, including 737s for TUIFly, but I’ll just ignore that here.

I said “3ish” above, and that’s because there are still some Brussels Airlines aircraft flying Frankfurt to Windhoek on behalf of Eurowings. In the last reorganization, Brussels was pulled out of the low-cost Eurowings division, so this is presumably going to end eventually. I’m not sure why it hasn’t yet.

In Switzerland, there is Edelweiss which has 2 A330s, 4 A340s, and 10 A320s that it flies under its own name in heavy leisure markets with a much more dense configuration than SWISS flies. SWISS owns Edelweiss and sells seats on the airline’s flights, but the integration from a passenger perspective is somewhat clunky.

I suppose I should also mention that Lufthansa Group is half owner of Turkey-based SunExpress which brings Europeans to Turkey on vacation. That’s been around for over 30 years, and it serves its own niche.

Where Does Eurowings Discover Fit?

So, with all these varying subsidiaries, where does yet another new one fit? Lufthansa Group had previously said that the now-Eurowings Discover would be modeled after Edelweiss. That would mean it would offer leisure-focused, short- and long-haul flying with higher density airplanes. Now, however, Lufthansa is saying that it’s just focused on long-haul with short and medium haul possibly coming in the future. Lufthansa also originally said it wouldn’t operate under its own brand name, but it has reversed course on that, so I’m not sure what to believe until I see this more formally rolled out.

Eurowings itself is already flying short-haul, so I don’t understand what value a new subsidiary would bring, if it does decide to duplicate short-haul flying. For long haul, Lufthansa has had several iterations flying low-cost long-haul recently. It had the CityLine experiment which I mentioned. Then it had SunExpress Deutschland (a now-shuttered Germany-based subsidiary of Sun Express) flying long-haul under the Eurowings name. Brussels is still doing that today as well, though that it going to end.

With all that gone, Lufthansa Group can have Eurowings Discover fly what will probably be the same exact airplanes in the same configuration. So… why?

I can only assume this is another labor play, because there isn’t really a good reason for it to exist otherwise that I can see. I reached out to Lufthansa to ask for more info to see if I was missing something, but I did not hear back before publishing. This all just feels like another exercise in complexity, something that goes against what Lufthansa has said it’s trying to clean up.

17 comments on “Lufthansa’s Confusing Low-Cost Journey Goes In Circles Once Again

  1. I would have to agree it’s almost certainly a labor strategy. If you have multiple airlines, and have a history of shutting them down, then labor groups know they have minimal leverage – if they push too hard, LHG can just shut them down and move the planes somewhere else. Or if they don’t want to be that extreme, they can just freeze or shrink that airline’s growth and pick up routes using a different, lower-cost one.

    1. Tory – What I can’t figure out is why Eurowings Discover would have a better labor situation than Cityline or SunExpress which were doing the same exact flying before.

      1. One potential reason: the pandemic has created a huge surplus of unemployed airline labor, and by creating a new airline they can tap that labor pool at new lower rates than their labor rates at the older existing airlines. In fact, I wouldn’t be surprised to see the new one displace more and more Cityline and SunExpress flying over time.

        1. I’m just amazed that mainline Lufthansa pilots haven’t fought against this in a contract. It seems like it’s not going to end well for them.

  2. And here I thought Norwegian had a complex corporate structure. At least I felt like I (almost) understood what each of its subsidies did. Lufthansa’s seems to unnecessarily overlap.

    1. So I assume this new airline / brand is not going to be part of Star Alliance and benefits for *A flyers will be minimal or non-existing.

      I think any cost savings from labor are going to be spent on

      – consultant fees
      – executives managing the subsidiary
      – marketing overhead
      – branding and advertising costs
      – repainting and reconfiguring aircraft

    1. My sentiments exactly. As I read this I could here the song “Springtime for Hitler” from the 1967 film “The Producers” playing in my head. From one great comedy to another.

  3. Wait, no Tim Dunn comment ?!?!
    I figured that we would at least get the pleasure of seeing how all of this compared to Delta’s numbers and strategies, or at least that of their European JV partner AF/KLM.
    I am highly disappointed!

    1. troyfilson – I don’t think so. Eurowings itself can fill that. I thought there was something about Eurowings Europe being wanted to fly Austrian routes since Eurowings was Germany-based. I don’t know why that matters except in some corner cases. My guess is that right now, Vienna flying is just down so they had to pick some place to put the airplanes and Dusseldorf won.

  4. Edelweiss is a strange name for a Swiss airline. Presumably named after an American composition of a faux-Austrian folk song about an Austrian flower, sung in an American movie by an Austrian family that flees the Nazis to Vermont. Yes, that says Switzerland.

  5. Someone with zero institutional memory keeps re-discovering that disastrous McKinsey PowerPoint.

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