British Airways and Lufthansa are increasing penetration of each other's home markets through airlines they have minority stakes in - the UK major with Deutsche BA and its German rival through Business Air. But the strategies are markedly different.
At Deutsche BA, BA managing director Robert Ayling is chairing a new advisory board containing several senior BA officials, and the carrier has increased its share of the domestic German market while entering new overseas markets, including a London/Gatwick route which will provide an opportunity for direct feed with Deutsche BA's parent.
Meanwhile, Business Air is part of Lufthansa's embryonic Superhub at Manchester, where Lauda Air and Luxair join the two carriers in an integrated operation. Lufthansa's US partner United may launch a transatlantic service to Manchester, increasing the intra-European feed opportunities.
Deutsche BA's new seven-person advisory board has four BA representatives, but both Ayling and Deutsche BA president Richard Heideker deny that its creation implies closer scrutiny by BA. Ayling says he wanted a better knowledge of the German market, while Heideker welcomes the closer involvement of BA experts. The board has no legal rights.
Deutsche BA remains in the red, partly due to rapid expansion; last year's passenger traffic rose 63 per cent to 1.8 million. In the last six months the carrier says its market share has increased from 30 to 37 per cent on the five home routes on which its B737 services compete with Lufthansa, although yields have been hit by a fares war.
The twice-daily service from Munich to London/Gatwick, launched in late March, will provide connection possibilities onto BA's flights to the US and Caribbean. At the same time the airline brought into service its first Saab 2000, which replaced a Saab 340 on the Friedrichshafen-Berlin route and launched new services from Berlin to Riga four days a week, and to Vilnius twice a week. The flights to the Baltic states will link with BA's London-Berlin operation, though the bilaterals do not allow codesharing.
Although BA owns 49 per cent of Deutsche BA, links have been limited so far. BA's director of business units, Val Gooding, sits on the Deutsche BA board and BA sells tickets on Deutsche BA's behalf as well as carrying out passenger handling at most of the carrier's destinations. Deutsche BA also uses the BA designator on cross-border EU routes.
While Deutsche BA is present in several different markets within Germany, Lufthansa is concentrating on the Manchester Superhub to enter UK regional markets.
The strategy is to use Business Air's Glasgow, Edinburgh, Aberdeen and Belfast flights to feed Lufthansa services to Frankfurt and Dusseldorf; Lufthansa CityLine flights to Munich, Hamburg and Stuttgart; Lauda Air flights to Milan and Vienna; and Luxair's to Luxembourg.
A codesharing agreement between Business Air and Lufthansa, which owns 39 per cent of the regional, is anticipated to further strengthen ties. By April 1996, the Lufthansa 'family' will all be operating from a refurbished Pier B, with 20 to 30 minute connection times. On its new Manchester-Belfast route, Business Air aims to get 15 per cent of the 230,000 passengers a year.
Source: Airline Business
