COMPETITION IN FRANKFURT Lufthansa faces Ryanair
Posted on 11/03/2016 | About Germany
Low-cost airline Ryanair is starting flights from the German city of Frankfurt, which is the main hub for Lufthansa - a move that opens a new front in the German carrier's battle with no-frills competitors.
Ryanair said Wednesday it would base two aircraft in Frankfurt and fly to vacation destinations Alicante, Malaga, and Palma de Mallorca in Spain, as well as to Faro in Portugal.
Low-cost airlines often choose secondary airports rather than main hubs such as Frankfurt, where costs can be higher. In fact, low-cost airlines have accounted for only about 4 percent of passenger traffic at Frankfurt's main airport. Ryanair says it will keep flying from much-smaller Frankfurt-Hahn airport some 125 kilometres (78 miles) to the west of Frankfurt.
The CEO of airport operator Fraport, Stefan Schulte, said Ryanair was being offered a break on fees in line with international practice of 40 to 50 percent in the first year, to be phased out in three years, the dpa news agency reported. Fraport has submitted its fee incentive plan to the transport ministry of the local Hessen region for approval.
Ralf Teckentrup, the head of competitor Condor that also flies out of Frankfurt's main airport, said the incentives were a “competition-distorting subsidy model.”
Lufthansa CEO Carsten Spohr said Lufthansa expected to be allowed to take advantage of the same lower fees and said it might move flights by its low-cost arm, Eurowings, to Frankfurt.
Lufthansa under Spohr has made sweeping changes to its business to meet competition from low-cost airlines within Europe and from state-backed Gulf airlines Emirates, Qatar Airways and Etihad Airways on long-haul routes. It has launched Eurowings, which flies to popular leisure destinations. Lufthansa has also pushed premium economy class seats with a bit more room to tempt economy class passengers to spend more.
The news came as Lufthansa said its third-quarter net profit rose to €1.42 ($2.1) billion) from €794 million ($1.18 billion) on reduced costs and a new pension deal with employees. Revenue fell 1.2 percent to €88.28 ($131.21) billion as repeated terror attacks and political and economic uncertainty continued to weigh on bookings.