Lufthansa announces expansion of low-cost subsidiary

Lufthansa announces expansion of low-cost subsidiaryLufthansa is set to expand its low-cost offshoot as the strike-prone German carrier looks to better compete against budget and Middle Eastern carriers.

The airline’s Eurowings subsidiary will be equipped with 23 Airbus A320s by 2017 to operate on services in Europe.

The company will also start low-cost long-haul services in conjunction with SunExpress, a joint-venture with Turkish Airlines.

The Eurowings long-haul service will initially use three leased 310-seat Airbus A330s to serve Florida, southern Africa and destinations in the Indian Ocean. The long-haul fleet could be expanded to seven aircraft.

Lufthansa chief executive Carsten Spohr said: “The ‘New Eurowings’ is our response to one of the major challenges confronting Europe’s airline industry.

“For several years now we’ve been facing fierce competition from the rapidly-growing low-cost carriers in the point-to-point travel segment, not only in Germany but throughout Europe, too. And we are sure to see this competition extend more and more to the long-haul travel segment in the years ahead.

“Our ‘New Eurowings’ is our innovative response, which will enable us to fashion our own markets here.”

Further European routes will also be added to the Eurowings network, operated from a new base outside Germany, in 2015.

The announcement came as Lufthansa pilots were due to start a second strike this week from today (Thursday).

The pilots are ostensibly protesting over changes to early retirement rules but their underlying grievances run deeper and concern Spohr’s new strategy, the Financial Times reported.

Lufthansa’s pilots are aggrieved because the new Eurowings services will operate outside a 10-year-old collective labour agreement, which prescribes generous pay and conditions for pilots at the flagship carrier and its lower-cost Germanwings subsidiary.

With pilots reluctant to give up their privileges, Spohr is circumventing Lufthansa’s legacy cost structures in order that the airline can grow.

Sourced from Travel Weekly

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