Air India is reportedly considering ceasing hub operations at Frankfurt, converting Alliance Air into a regional carrier and launching domestic operations through Air India Express, to turn around the loss-making carrier (DNA, 25-Oct-2010). It plans to suspend hub operations from Frankfurt Airport from 31-Oct-2010, instead operating direct routes to Europe and the Americas. The carrier expects the move to save INR2,000-2,500 million (USD45-56 million) p/a and expand international operations from smaller cities in India. For example, its Delhi-Frankfurt-Toronto service is to become Amritsar-Delhi-London-Toronto service.
Air India considers ceasing operations at Frankfurt
You may also be interested in the following articles...
Lufthansa: mainline pilot deal, growing Ryanair threat at Frankfurt; Eurowings vital to both.
The Lufthansa Group's juggling act continues to impress with the sheer number of balls that it has sought to keep in the air over the past year.
Striving for labour productivity improvements in its mainline operations, while also attempting to minimise industrial unrest; expanding its Eurowings low cost brand through organic growth, while also integrating the acquisition of Brussels Airlines and the wet lease of aircraft from airberlin; facing the growing threat of Ryanair's entry into its biggest hub at Frankfurt, while seeking to maintain a good relationship with the airport's owner Fraport; keeping positive momentum in its financial performance after earning more than its cost of capital in 2014-2016, while the global cycle may have reached a peak.
In the same week as reporting solid, if unspectacular, financial results for 2016, Lufthansa has achieved a break through agreement with its pilots over pay and conditions. As a strategic tool, Eurowings helped it to reach this agreement, but the LCC subsidiary now needs to become financially successful.
Later in Mar-2017, Ryanair will start its first four Frankfurt routes, to which it will add 20 more next winter. Eurowings will need to be part of Lufthansa's response to this growing competitive threat.
SAS' new foreign bases in London & Spain show rare innovative thinking for a legacy airline
On 01-Feb-2017 SAS announced that it is to establish a new AOC in Ireland, with operational bases in London and Spain. It has yet to specify the airports that will become its first bases outside its three Scandinavian home countries. SAS is following a course established by Norwegian, apparently forgetting its previous objections to its LCC rival's approach.
Indeed, it seems that SAS' move is a pragmatic response to intense competition from LCCs, particularly from Norwegian. According to SAS' 2016 Annual Report, 65% of its ASKs compete with LCCs. Scandinavia's high labour costs are a significant handicap in competing with airlines that have bases outside the region.
Spain and UK are its two biggest markets outside Scandinavia, with London Heathrow its biggest non home airport. After years of cost reduction programmes – also years of initiatives aimed at enhancing the appeal of SAS' product and brand to its core target market of Scandinavia's frequent flyers – a bolder step is needed. SAS will be a very rare example of a European legacy airline with bases outside its home market, more than 20 years after market liberalisation presented the opportunity.