Deutsche BA has unveiled a new strategy, aimed at putting the airline into profit within 18 months and refocusing on internal German services. Since its launch by British Airways in mid-1992, the carrier has rapidly established itself as Germany's second-biggest after Lufthansa, but is still struggling to make a profit.
As part of an efficiency drive, which the airline says has cut 12-14% from operating costs, Deutsche BAhas rationalised its fleet over the past year, shedding all turboprops. The aim is to concentrate on a fleet of 18 Boeing 737-300s by October. It has also added seven more seats in each aircraft.
The focus for expansion is now the internal German market. On 20 January, Deutsche BA introduced two new routes, being flown eight times daily, from Munich to Cologne/Bonn and Hamburg.
Chief commercial officer Paul Giblin says that this gives the airline operations on eight of the 11 most important domestic routes. The remaining three key routes are to Frankfurt, and Deutsche BA does not yet have enough slots to justify operating into the Lufthansa stronghold - Germany's busiest airport.
"We want to put this [new strategy] into place and see this business turn around in 18 months. Then we will look at other options," says Giblin. Of the airline's international routes, only connections to London Gatwick, Moscow and St Petersburg remain, alongside Deutsche BA's charter business.
The airline is also introducing a new, competitive, single-class fare system on domestic flights. Giblin expects about 35% of the airline's business to come at the cheapest, DM190 ($118), fare level, with half of the passengers paying the fully flexible DM520 fare.
Average load factors in the first half of the current business year have been some 53% on the core jet-airliner routes, says Giblin. By stimulating the market with the new fares, Giblin hopes to increase this to between 60% and 65%.
Despite the forthcoming deregulation of European airspace, Giblin does not expect any immediate change in ownership. British Airways holds 49%, with the rest in the hands of three German banks. The banks have the option to sell their shares in the third quarter, but no discussions have taken place, says Giblin, adding that it remains important to maintain the company's German identity.
Source: Flight International
