Lufthansa aims for Germanwings route transfer in July 2013

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Lufthansa is rebranding its low-cost subsidiary Germanwings as the budget airline takes over large parts of the mainline carrier's European network.

Lufthansa will transfer all continental flights outside its main hubs in Frankfurt and Munich to Germanwings next year. The point-to-point traffic covers short-haul routes such as Berlin to Paris, while long-haul travellers should be unaffected by the change, except for transfer passengers for a small number of intercontinental flights in Dusseldorf.

The objective is to return short-haul operations to profitability by 2015. Lufthansa says these have been making losses in the three-digit million euro range for years.

The airline plans to save around €900 million ($1.2 billion) by 2015 as part of the group's €1.5 billion "Score" cost-cutting programme. The move to Germanwings is create savings worth €200 million.

Christoph Franz, group chief executive, says that the carrier had just two options - focus exclusively on hub operations or continue decentralising services under a new business model - and decided to pursue the latter.

Last year's decision to transfer Lufthansa flights to Germanwings in Cologne, Hannover and Stuttgart demonstrated "some [cost-cutting] progress", he adds, but this was "not enough".

No matter how costs develop at Lufthansa and Germanwings in future, Franz wants the budget carrier to provide a 20% unit cost advantage over the mainline carrier. This is to be achieved through lower salaries and higher productivity, with aircraft operating more flight hours than those at the parent airline.

A standardised Airbus A320-family fleet is to drive down maintenance and training costs while the airline wants to make ground processes more efficient and reduce catering expenses through on-board food sales.

Lufthansa hopes that premium passengers will accept the move to the low-cost carrier through use of a three-tier ticket category system. While Germanwings aircraft have no separated business class section, travellers can book "Best" category tickets, which includes seating in the first three rows, in-flight service, increased luggage allowance, airport lounge access and premium class air miles.

The centre seat will not be occupied in this section on flights to, for example, Austria, France and the UK. But the free space will not be provided on routes to "warm water" holiday destinations for the time being.

An intermediate "Smart" tariff corresponds to Lufthansa's economy class - including hold luggage allowance, on-board snack and drink - while the "Basic" category offers no frills except air mile collection.

Lufthansa says it wants to "square the circle" in offering the "best of both [low-cost and network carrier] worlds". The airline adds that it doesn't expect to lose customers after positive experiences in Stuttgart, where all its services were transferred to Germanwings last year.

Germanwings will formally take over Lufthansa's decentralised routes on 1 January, but the operational transfer to the Cologne-based airline will not begin until 1 July.

A new livery has been designed for Germanwings aircraft, which follows Lufthansa's basic colour scheme with a white fuselage and grey belly. The airline's name remains in the current magenta tone, in lower case on the upper forward fuselage. But the script has been aligned with Lufthansa's lettering.

"Lufthansa Group" has also been added in a smaller grey letters below the window line, while the tail fin features a stylised 'W' in both magenta and yellow colouring.