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Aviation History
1995
1995 - 1490.PDF
Goliath tition" with Delta's former partner Lufthansa, but increasing stress is being placed on devel oping its international network. "We see our domestic network...as a clear necessity for market awareness and we want to grow internationally," says Heideker. Deut sche BA wants to be seen as an international operator which also serves Germany's most important domestic routes. The airline has recently expanded its East European network with new services from Berlin-Tegel Airport into the Baltic States — four weekly flights to Latvian capital Riga, and two to Lithuanian capital Vilnius. FLIGHT INTERNATIONAL 24 - 30 May 1995 Heideker maintains ambitions to introduce routes to Poland and Ukraine, but is battling strict restrictions on traffic rights which, for the moment, offer German carriers no addi tional capacity into these countries. The airline is considering how to continue its expansion in 1996. While it is too early to say precisely where Deutsche BA intends to go, Heideker says that die direction of expansion from Berlin will be primarily north-eastwards but — with the possibility of introducing a ser vice to London Gatwick, depending on how the new Munich-Gatwick service develops. Heideker predicts that the network from Munich will expand towards die south: to Italy and Spain, for instance, where die airline is looking at Barcelona as a possible destination. The domestic network has proved to be a thornier issue in the past year, however, with an aggressive fares-war blowing up between Deutsche BA and Lufthansa as the main com batants, and dragging carriers such as Eurowings into the fray. FARES-WAR VICTORY In 1994, Lufthansa introduced a headline-grab bing ticket-price initiative on its Lufthansa Express routes, which offered domestic passen gers limited-availability DM99 single fares. Deutsche BA responded and is now claiming victory in this round ofthe battle. In a domestic market which has grown by 15% following the introduction ofthe new low fares, Heideker says that his company's share has increased, from 31% in June 1994, to 38% in January this year. "We have gained additional traffic and Lufthansa hasn't gained anything," says Heideker. He does not believe that his larger rival can maintain its present fare structure, saying that "...Lufthansa is faced with heavy losses on its Express network." The German flag carrier counters that it is "quite satisfied" with its Express service, which it says is carrying 15% more passengers now than in September 1994 — an increase corresponding to Heideker's assessment ofthe growth ofthe overall domestic market caused by the fare cuts — and wants to extend the concept to cover all of its domestic routes. The airline has recently begun to consider dropping its shorter internal routes, however, such as the links from Frankfurt to Cologne, Hamburg and Stuttgart, because of losses. Deutsche BA is now considering adding a Munich-Hamburg service to its domestic net work in 1996, but this decision will depend on how fare levels develop over the coming six months or so. An easing of the fares war would certainly be welcomed by Deutsche BA, which — unlike the now-resurgent Lufthansa — has yet to turn a profit. Heideker had hoped to break even by mid- 1994, but, although market share has risen beyond expectations, the past year's intense competition has cheated him of that goal. The MIR TRANSPORT new target date to reach profitability is 1996. No formal results have yet been released for the financial year ending 31 March, 1995, but the company says that it has increased its turnover from DM300 million in the year 1993/4, to some DM450 million in the year just gone. The number of passengers carried has increased from 1.1 million in the business year ending 31 March, 1994, to 1.75 million in 1994/5, and the airline has been flying with 50% load factors on international routes, and about 56% on domestic services. FLEET STRATEGY Deutsche BA is also modernising its turboprops, and establishing a jet-fleet strategy. The compa ny now operates an all-Saab turboprop fleet alongside its mixed Boeing/ Fokker jets. The first high-speed, 50-seat, Saab 2000 turboprop was introduced to service at the end of March. A further four are to be deliv ered by the end of this year, replacing five of the airline's Saab 340s and leaving three still in service. These may eventually be replaced by more 2000s — Deutsche BA has five options with Saab on top ofthe firm orders. Heideker says that one ofthe advantages ofthe 2000 is its suitability for charter operations. "Our charter destinations are all within the Mediterranean area, [and] are all in the range ofthe 340 with a flight time of over 2.5h: with the 2000 we can do such routes in under 2h," he explains. Payload restrictions over these ranges would also increase the 340's cost per seat over that ofthe 2000. The airline's jet-airliner fleet now consists of seven 130-seat Boeing 737-300s and five 100- seat Fokker 100s, but Heideker says that the company is considering making this an all- Boeing fleet over the next three to five years. "For market development, it is nice to have a 50-seater to begin with [on new routes], a 100- seater to continue and then a 130- to 140-seater to consolidate the new routes, but this is in con flict with cost-effectiveness," he says. A mixed fleet costs an airline more for maintenance and training, and Deutsche BA is now weighing up whether the potential cost benefits of a single- type fleet will outweigh the risks of starting up new services with such a large aircraft. For now, Deutsche BA5> policy of expansion appears set to continue, driven by Heideker's positive view of the future ofthe air-transport market. "I think the worst is over in the short term — a lot of companies are claiming that they are making profits again. There have also been big achievements in restraining capacity, which was one ofthe biggest reasons for the dramatic loss es [in recent years]," he says. Yet the consolida tion process in Europe "...is just beginning",'he believes, and one ofthe biggest remaining prob lems is inefficient airlines which remain in busi ness supported by state subsidies. Until this changes, states Heideker, then "...the market will not really work like a normal market, where only the best survive". • 43
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