German leisure carrier Condor is to turn its attention to the city-to-city market in a bid to balance its traditional holiday resort operations with business that is less subject to seasonal variations.
One of the five in-house airlines of tour operator Thomas Cook, Condor sees rival German carrier Air Berlin as a role model for its future. Air Berlin began complementing its holiday routes with low-fare inter-city services towards the end of 2002, while earlier this year, German charter operator LTU also began implementing a low-fares scheme on certain city routes.
Condor moved into low-fare pricing on seat-only travel in May last year and the airline expects about one-third of its sales this year to be seat-only. Its European network presently covers primarily resorts in southern Spain, Italy, Turkey and northern Africa.
But speaking to Flight International in Frankfurt, Thomas Cook airline division chief Ralf Teckentrup said that the extension of operations into the non-traditional city-pair market was the “next step” for Condor. This sector presently accounts for only 5-10% of the airline’s services.
“We have to increase the number of city pairs we’re serving where the traditional tour-operator business is not the main driver,” he says. “My goal is to be more independent from just one single type of customer.”
Seasonal variations in the holiday market have always proved problematic, he says: “You can fly like hell in the summer, but not in the winter.” Teckentrup says that he considers Air Berlin’s combined holiday operation and city-to-city business to be a strategy worth adopting. He adds that he considers the carrier to be Condor’s “benchmark” in terms of cost structure, but admits that, at present, Condor has not reached a comparable level.
But Condor is undergoing a restructuring programme aimed at generating a €240 million ($287 million) improvement to the business, about one-third of which will be derived from increased revenues.
Another €160 million will be sourced from cost-savings: about €80 million in reduced personnel costs, through improved productivity, and the other €80 million from other areas.
Teckentrup says that Condor will have realised about €110 million of these savings by the end of this year and, once the other €50 million is in place, by the end of 2006, the airline will have the necessary competitive cost base.
DAVID KAMINSKI -MARROW/FRANKFURT
Source: Flight International
