Lufthansa's CEO Carsten Spohr has today made controversial comments on the cheap tickets paid by some of the carrier's major European ultra-cost rivals.
Lufthansa's problems with cheap prices
Spohr has said airlines that sell flights for less than 10EUR are "economically, ecologically, and politically irresponsible." He said "flights for less than 10EUR shouldn't exist."
Not surprisingly, Spohr has the motivation for what he says – Ryanair and EasyJet have grown significantly in Germany and have sold very cheap tickets from there. Spohr says that "no one is going to push us out of our home markets" and that "the price war also leaves its tracks with us."
He also says that Ryanair and EasyJet "lose a lot of money" as they try to increase their market share in Germany. The effect of this has felt so much that it has led to Lufthansa reducing the profit forecast.
This is practically all that Lufthansa's low-cost Eurowings department is restructuring, and I'm guessing it's not related to EasyJet and Ryanair
I take on Spohr's comments
Spohr's comments are both outrageous and self-service, in my opinion, and is one of the sillies ways I have seen Lufthansa attack their ultra low-cost carrier (and they have tried many methods).
Selling cheap prices economically, ecologically and politically irresponsible?
Perhaps we have looked at different annual reports, but both EasyJet and Ryanair are very profitable. They just have another way to sell tickets than Lufthansa, and that should be fine.
Most do not pay 10EUR to fly. They can pay for seat tasks, bags, beer, lottery cards, etc. And the business model works for them.
If his suggestion is that airlines do not make money as they grow market shares in Germany, is that not the case for many airlines? Generally, routes are not profitable from day one for airlines – it takes time to increase market share, and that's something Lufthansa should be well aware of here.
For me, this is the most interesting point. It is not denied that the journey has become much more accessible globally thanks to ultra low cost carriers, and today there is much debate whether it is good or not.
With governments increasingly trying to reduce airline emissions and with KLM itself urging people not to fly, times are different than before.
But Lufthansa seems to take the position here that the right way to reduce emissions is to eliminate cheap ways to fly? It's convenient. Where is the campaign encouraging its passengers at full cost from having an e-meeting, rather than flying out to face to face?
Ironically, Ryanair has a considerably more fuel-less flight than Lufthansa does (they operate only 737s on average over eight years, while Lufthansa operates all types of aircraft, many of which have higher per seat cost), so Ryanair's emissions per passenger are lower.
I'm not 100% sure what Spohr is referring to. My guess is that he refers to how EasyJet and Ryanair have some creative ways they've set up their business to cut costs. If that is the case, there are plenty of airlines where it is, and it says he only puts them out after they have expanded in Germany.
In my opinion, Spohr is the distance with his comments. For so long, Lufthansa has taken Germany for granted, and now EasyJet and Ryanair have finally given them some competition for short flights.
There is nothing financially irresponsible with this, because the airlines that sell cheap flights are profitable.
As far as ecological responsibility, there is no doubt that we are seeing a trend towards trying to reduce emissions, but I do not think that cheap tickets are the problem. A person paying 10EUR to fly Ryanair has as much of a right to fly as someone pays 60EUR to fly Lufthansa, in my opinion.
What do you do about Spohr's comments? Is it irresponsible for airlines to sell super cheap tickets?
(Tips for Niko_jas hat)