Andrzej Jeziorski/MUNICH
DEUTSCHE BA IS considering complaining to the European Commission over Lufthansa's decision to slash fares on domestic routes.
The move comes after the German flag carrier announced that it is replacing its low-priced Express concept with a new domestic service, introducing a fares structure which Deutsche BA believes is specifically designed to target the 49% British Airways-owned company. Lufthansa is also introducing improvements in cabin and ground service.
The Lufthansa decision is the latest development in a fierce fares-war, which erupted in 1994 with the introduction of Lufthansa's new Express fares structure, including a single economy fare as low as DM99 ($67) between any two points on its route structure.
Deutsche BA responded by restructuring its own fares to levels at which it says it is impossible to operate profitably. As a result, the company - which has grown in three years to be Germany's second-biggest airline - has missed its target of making a profit in 1994, and is now hoping to achieve this in fiscal year 1996-7.
Lufthansa says that it is replacing the Express service, which has been available on seven domestic routes since 1 September 1994, with a standardised nationwide domestic service and a route-dependent fares system.
According to Deutsche BA, this boils down to markedly lower Lufthansa fares on the five domestic routes where the two airlines are competing directly.
Yet, despite its concerns over the continuing ticket-price war, Deutsche BA is claiming that it has been winning the battle so far. The company's passenger volumes on the five routes competing with Lufthansa Express have increased by 61.1% on the previous year between September 1994 and August 1995, in a market which has grown by 18.7%.
Source: Flight International
