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Airlines pin hopes on sales for darker months

16-Sep-2010
Lufthansa CEO, Wolfgang Mayrhuber
Lufthansa CEO, Wolfgang Mayrhuber

Following a rather robust northern summer, airlines are looking to the autumn and falling demand. The "sales" are beginning to appear. One offer that was recently proffered came from Lufthansa, encouraging autumn travel to Munich, perhaps to quaff a beer or two.

The chart shows the cities included in the offer, the lowest one-way fares advertised (taxes and surcharges, if any, not included), the mileage, yield and competitive position.

Origin

o/w fare

mileage

yield

dir comp

n/s

NYC

393

4028

0.10

Y*

Y

BOS

401

3838

0.10

N

Y

CLT

453

4565

0.10

N

Y

DFW

393

5310

0.07

N

N*

HOU

393

5400

0.07

N

N*

MIA

468

4994

0.09

N

Y

PHL

393

4117

0.10

Y*

N*

SFO

518

5855

0.09

N

Y

ATL

501

4783

0.10

Y

N

CHI

468

4510

0.10

Y*

Y

DEN

543

5209

0.10

Y*

N*

DTT

497

4320

0.12

N

N*

LAX

518

5972

0.09

N

Y

MCO

468

4910

0.10

N

N*

SEA

568

5265

0.11

N

N*

WAS

468

4235

0.11

Y*

Y

Odds tilted in Lufthansa's favour

Deals are available to the 16 cities in the US served by Lufthansa. Of that, eight have non-stop Munich service, all operated by Lufthansa with the exception of Philadelphia, operated by US Airways. If fares are equal, the non-stop service should tilt the odds towards Lufthansa.

Of the 16, seven are Star Partner hubs. From those cities, the direct competition is supplied only by Star affiliates and the flights carry Lufthansa numbers as well. At only one US location, Atlanta, is there a Munich non-stop flight operated by a competing alliance member; Delta. From its Detroit hub, Delta operates to Frankfurt as well as from New York JFK.

Finally, these are the lowest fares Lufthansa has available across a period from mid-September to early October. An actual search of random dates often gives higher fares and, despite the “sale”, on many travel dates, the non-LH (even non-Star) fares undercut Lufthansa’s pricing.

Given those parameters, how do the competing alliance groupings compare in terms of schedules and one-stop access? Munich has competition but Lufthansa and Star have, by far, a dominant position.

SkyTeam travellers best served

SkyTeam travellers are best served by access via Paris, Milan or Amsterdam and oneworld folks are funnelled primarily via London with a few connections available through either Madrid or Helsinki.

SkyTeam Transatlantic Nonstops

Origin

Conex

ATL

P/A/M

BOS

P/A

CHI

P/A

CVG

P

DFW

A

DTT

P/A

HOU

P/A

LAX

P/A

MEM

A

MIA

P/M

MSP

P/A

NYC

P/A/M

PDX

A

PHL

P

PIT

P

SEA

P/A

SLC

P/M

SFO

P/A

SkyTeam’s carriers provide most of their connecting possibilities on the European end and a number of US departure points provide multiple cities and timings for the connection to be made. From New York, there are three connecting cities and departure times throughout the day. If the SkyTeam group chooses to match fares, they have a formidable set of connections.

oneworld benefits from British Airways’ strong network and the service provided by American to London Heathrow. However, the other two main partners add no new origin cities in the US that are not already part of the American Airlines/British Airways network. None of the members offers a non-stop service from the US and while residents of cities like Miami and Dallas, with strong oneworld affiliation, would likely opt for alliance carriers, they are the least competitive in the US-Munich market.

This example, based on a Lufthansa offer, clearly favours Star. However, by choosing another European city, the advantage would shift. If London, for instance, was the target city, oneworld would hold an overwhelming non-stop advantage.

Non-hub points, Barcelona for example, have a much more level playing field and even smaller hubs, Copenhagen or Vienna for example, benefit from a wider pool of non-stops and connections more evenly spread across the alliances.

Real test after Oktoberfest

Lufthansa does not appear to be offering fares that are “too good to pass up” but rather is taking advantage of a globally known event, Oktoberfest, to boost traffic with an appealing, if difficult to find, fare level.

The real test will come after October and the cold months thereafter. Most European carriers believe (or really, really hope) that they will be able to remain in the black for 2010.

With stock markets slipping daily, and talk of a double-dip recession more widespread, one wonders what kind of deals may be available in the coming months; and just how deeply fares will need to be discounted to fill seats.


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