The Lufthansa Group wants to take more control of its so-called network brands, which include famous European airlines like SWISS and Austrian Airlines, as part of a new plan to slash costs while also improving passenger satisfaction.
German business newspaper Handelsblatt has gotten hold of an internal memo that suggests Lufthansa is plotting a major restructuring early next year that will force its network airlines to cede control of core operational and commercial decision-making to the parent company.
What is the Lufthansa Group?
The Lufthansa Group is one of Europe’s biggest airline conglomerates, which not only includes its namesake Lufthansa brand and low-cost subsidiary Eurowings, but also a number of other airlines and related aviation businesses.
Within the Lufthansa Group, there are five network airlines:
- Lufthansa
- SWISS
- Austrian Airlines
- Brussels Airlines
- ITA Airways
These network airlines have, until now, had relatively broad autonomy, but Lufthansa now wants to centralize decision-making at a Group level in an effort to boost profitability and passenger satisfaction.
Why Does Lufthansa Want More Centralized Control?
According to Handelesblatt, Lufthansa has become increasingly frustrated with low profitability amongst its network carriers, with the exception of SWISS. It also wants to emulate the success of Europe’s two other airline groups – Air France-KLM and IAG have far stronger operational performance.
As it stands, these network airlines are operating as completely separate entities, especially when it comes to network planning and schedules.
Lufthansa envisages a reorganization that will essentially leave the management of these airlines responsible for the in-flight product, while the Group will take control of nearly every other business function.
How Lufthansa Plans to Take More Control of Its Network Brands
According to the internal memo, the Lufthansa Group will centralize functions such as network planning, commercial management, sales, and loyalty programs, and new boards at the Group level will oversee key areas such as airport hubs, technology, personnel, and finances.
The CEOs of Lufthansa’s network airlines will have their authority significantly stripped back, with decisions now made at Lufthansa’s corporate headquarters in Cologne.
Could This Mean The End Of Unique Airline Brands?
The primary concern about this restructuring is that these unique airline brands could lose their national identities as they become enveloped by the Lufthansa Group.
This is similar to concerns about the future of Hawaiian Airlines now that it belongs to the Alaska Airlines Group. Hawaiian Airlines and Alaska Airlines will soon operate under a single operating licence, and there are worries that Hawaiian’s unique identity will slowly be stripped away.
