Germany's main low-cost carriers are beginning to show modest profits in a market that is also seeing a renewed challenge from the leisure sector.
Although they do not release hard financial figures yet, two of Germany's low-cost players say they were profitable last year, while two others expect to break even during this year. The largest, privately-owned Air Berlin, says it reached its revenue target of over €1 billion ($1.3 billion) and made a profit. A 25% rise in passengers to over 12 million in 2004 was mostly due to the success of its low-cost scheduled operation.
Germanwings, launched in October 2002 from its Cologne airport base by Eurowings, the regional carrier that mainly flies on behalf of Lufthansa, ended in 2004 with a small profit at both operating and net levels, says managing director Andreas Bierwith: "This is more or less on budget, but it has to be remembered that this budget was made before we had easyjet or Hapag-Lloyd Express as competitors, so we've done better than expected." The carrier saw revenues grow from €150 million in 2003 to €240 last year, with over €300 million predicted for this year.
Germania Express says it will break even this year. A low-fare spin-off from charter carrier parent Germania, the airline began services with a fleet of 14 Fokker 100s in June 2003. After establishing its main bases in Berlin, Tegel, Düsseldorf and Munich the carrier says this year will be one of consolidation.
Rolan Keppler, the new chief executive at Hapag-Lloyd Express following the resignation of Wolfgang Kurth, says the carrier will achieve break-even during this year. Launched by German leisure group TUI in December 2002, the carrier carried 2.7 million passengers last year.
The country's growing low-cost sector and the fight back from leisure carriers means the German market is one of the most competitive in Europe at present, says Alexander Kaiser , senior airline consultant at Frankfurt-based Cell Consulting. Leisure carriers Condor and Hapag-Lloyd, the sister carrier to Hapag-Lloyd Express, have been moving towards the low-cost model converting their seat-only businesses into full scheduled operations with dynamic pricing and internet bookings.
TUI, for instance, is bringing Hapag-Lloyd closer to its Express product with centralised marketing and route planning as it repositions the charter carrier more as a low-cost player.
Source: Airline Business
