Lufthansa is serious about the leisure market

A Lufthansa Airbus A320neo. Photo: © Phillip Rohmberger / IFN

The German flag-carrier is introducing new continental leisure routes that it hasn’t flown before – even before the Coronavirus crisis.

Lufthansa is known for a lot in its home country, but not for operating holiday flights. This job had previously been carried out by its subsidiaries. Over the past years, connections between its largest hub Frankfurt and various destinations around the Mediterranean Sea were mostly served by SunExpress Germany, the German arm of SunExpress, a joint-venture between Lufthansa and Turkish Airlines.

However, in June, in the middle of struggling with the Coronavirus crisis, Lufthansa announced that SunExpress Germany will be shut down. The move affected around 1,200 employees. Numerous leisure routes could be lost to competitors, if Lufthansa didn’t come up with a plan to secure its market share.

Not much else to do

The summer holiday season of 2020 showed one key effect of the Covid-19 pandemic for airlines: Demand for leisure routes within Europe is recovering faster than other sectors. For Lufthansa, an airline known for its high market share among business travellers, this is a major hurdle for overcoming the crisis and forces the company to adjust. “It is correct: The demand for holiday travel is recovering significantly faster than demand for business travel. We want to be part of that.“, Lufthansa tells International Flight Network.

Its response comes in the form of new routes: For the first time ever, the German flag-carrier will operate a large number of holiday flights entirely by itself. On Wednesday, the airline announced 15 new leisure destinations for the summer season 2021 – all operated from Frankfurt. Two of those destinations (Tenerife and Gran Canaria) are already being added for the winter season (2020/21) and will continue in the summer.

With this move, Lufthansa underlines its strategy to rather kill subsidiaries, than to ground its own planes. Although the airline claims the new routes are not being introduced to replace SunExpress Germany’s now-suspended operations, they are in fact filling the market that would otherwise be lost. Earlier this year, a similar fate also met Cologne-based low-cost carrier Germanwings. Shut down by Lufthansa, its routes are now being replaced with Eurowings.

Future strategy?

It was not immediately clear whether Lufthansa is just looking for some routes to operate while everything else is going through a crisis, or if it actually wants to position itself as a go-to airline for holiday flights. When asked on this by International Flight Network, Lufthansa says that it is determined to expand its offering in the leisure market as part of its strategy going forward.

But as the leisure market is typically more budget-sensitive than Lufthansa’s core market, business travellers, it will be hard to keep up with the pressure coming from low-cost competitors. The airline does have its own low-cost brand with Eurowings, but even before the current situation, it has repeatedly held off on introducing it to Frankfurt Airport. Now that SunExpress Germany is no longer, Lufthansa at some point may very well be forced to either cheapen its own product or let another subsidiary take care of holidaymakers.