Lufthansa's planned new lower cost long-haul airline must avoid legacy issues

Lufthansa's recent confirmation that it is adding premium economy cabins to its entire widebody fleet is one of a number of recent initiatives aimed at making its long-haul operations more competitive. The most radical, and certainly the highest profile, of these developments is its plan to establish a new lower cost airline, under a new brand and aimed at the long-haul point to point leisure market.

First announced in Jul-2014, Lufthansa's Executive Board presented more details of this long-haul plan to its Supervisory Board in Sep-2014. Although operating a fleet of only seven aircraft out of a Lufthansa-branded widebody fleet currently in excess of 100 aircraft, the success (or otherwise) of this new operation could have far-reaching consequences across the group.

A recent CAPA report suggested that Lufthansa's short-haul LCC, Germanwings, has too many legacy issues, but that the more flexible and lower cost pilot contract at its Eurowings subsidiary gives it options for growth. Lufthansa must ensure that its new lower cost long-haul airline avoids all legacy issues that might be a drag on its cost efficiency.