Lufthansa reapproaches Turkish for long-haul venture

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Lufthansa is evaluating the establishment of a low-cost, long-haul subsidiary in partnership with Turkish Airlines.

The separately branded airline is to become part of Lufthansa’s “Wings” budget carrier family – comprising Germanwings and its future pan-European sibling Eurowings – which is to be focused on point-to-point traffic for “price sensitive” travellers, says the German group.

Between seven and nine Airbus A330s or Boeing 767s are to be operated initially by the new airline, says Lufthansa Group chief executive Carsten Spohr.

No decision has yet been made about the carrier’s launch and branding. Lufthansa is in “very advanced” discussions with its Star Alliance partner and main long-haul rival Turkish Airlines about jointly establishing the proposed airline, says Spohr. But he adds that the German group has yet to determine whether the carrier will be set up as a partnership or wholly owned subsidiary. That decision is to be made in the autumn.

The carrier is to have a single-type fleet. Both the 767 and A330 are readily available on the market, says Spohr. He adds that it would also be feasible to take over 767s from wholly owned Austrian Airlines or A330s from part-owned Brussels Airlines.

Lufthansa’s 105-strong long-haul fleet will not be reduced, however.

The long-haul fleets of Austrian and Brussels Airlines could meanwhile be replenished with A350s on order for Lufthansa’s fleet renewal, says Spohr. In September 2013, the group ordered up to 55 A350-900s in a deal comprising 25 firm orders, 15 options and purchase rights for another 15 aircraft.

While Lufthansa’s first A350 is to be delivered to in 2016, the proposed long-haul budget subsidiary could start operating in late 2015.

Munich, Dusseldorf and Cologne are being considered as cities from which to launch the new carrier’s routes, says Spohr. The latter two are located in Germany’s most populous state of North Rhine-Westphalia. However, he adds that the budget arm could in future also operate from other European countries, such as Austria, Belgium and Switzerland, under Lufthansa Group’s “multi-brand, multi-hub” set-up with other subsidiaries in those countries.

The concept of an intercontinental point-to-point carrier is “vertically and horizontally compatible”, he says. This means that the airline’s fleet and network could grow depending on its profitability. But it could also involve additional, external partners in future.

Spohr says the new carrier would “not necessarily” be established in Germany. As a result of the group’s structure, other candidate countries include Austria, Belgium and Switzerland. But it would be possible to have an air operator’s certificate “wherever” suitable, says Spohr.

He is not denying that the proposed airline will become a threat to Lufthansa’s mainline long-haul business as it is could help to direct passengers away from its hubs in Frankfurt and Munich. But he says that – even in partnership with long-haul rival Turkish – “internal cannibalisation is better than external cannibalisation”.

This article was amended to emphasise that the new carrier will not necessarily be based in Germany