Gulf carriers irrational market players: Lufthansa

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The Gulf carriers and Turkish Airlines are "irrational" market players in terms of capacity, says Lufthansa's chief financial officer.

Simone Menne says that the carriers act more as "ambassadors of their country" instead of rational, investor return-oriented companies, at a press lunch in New York on 25 March.

"We believe that most of the players and top management in airlines nowadays are definitely more rational but we have and we see players - and that is [the] Gulf for example - where airlines play a different role," she says.

The Gulf carriers include Emirates, Etihad Airways, Qatar Airways and Turkish Airlines, according to Menne.

Lufthansa capacity was nearly flat during 2012 whereas Emirates posted a 15.4% increase in available seat kilometres, Etihad 25.4%, Qatar 10.6% and Turkish 20.6% during the same period, according to Flightglobal/Innovata data.

"The threat from Gulf carriers is coming in Southeast Asia," says Menne. Lufthansa ended service to Calcutta and Hyderabad as a result of the expansion of these airlines, she says, adding that it continues to maintain service on all of its established routes to the region.

Lufthansa does not feel pressure from Gulf carriers on routes across the Atlantic or to north Asia, adds Menne.

The airline has three options when it is faced with competition from irrational market players, she says - evaluate partnerships or joint ventures, an alternative platform to serve the market, or retreat from the market. It is currently evaluating these options in terms of its service to Southeast Asia.

Lufthansa and Turkish are in "regular talks" in terms of having a relationship deeper than their current partnership through Star and joint venture carrier Sun Express, says Menne. She did not elaborate on the direction of these talks.

Chinese and Russian carriers are likely to be the next irrational market players in five or ten years, says Menne.