by Lufthansa Flyer | Sep 15, 2016 | Dusseldorf, Eurowings, Featured, Hamburg |
Add more to the pile of woes at Eurowings……
Ver.di, the union that represents Eurowings’ ground crew and staff as well as airport personnel, is threatening to strike at short notice after recent labor negotiations fell apart. According to the union, 4 negotiation sessions with Lufthansa’s LCC management failed to yield any progress.
At the center of the labor issue is the union’s contention that employees have not seen a raise in 8 years. According to the union, the average Eurowings ground crew / staff employee earns only €131 more than Germany’s minimum wage requirement.
According to the union, it appears they are prepared to call a 4 hour strike with little to no notice between now and the next negotiation session which is slated for September 26. Nearly 500 employees can walk off the job at Eurowings bases in Hamburg and Dusseldorf should a strike be called.
The Union is seeking a 7 percent pay raise while Eurowings has countered with only a 1.3% raise for 2017 and 2018. So it doesn’t take a calculator to see that a major chasm exists between the 2 sides. The current contract expires on September 30 at which point things could really get ugly.
by Lufthansa Flyer | Sep 10, 2016 | Air Berlin, Eurowings, Featured, Lufthansa |
What has been rumored and speculated for the past several weeks is set to become fact and reality. Lufthansa is poised to take over 40 of Air Berlin’s aircraft at at the same time take over approximately one-third of Air Berlin’s routes.
The decision is expected to be made at the upcoming LH Supervisory Board meeting scheduled for later this month and it is fully expected that the board will rule in favor. The timing works out well because this will allow Lufthansa to time the ‘take over’ of the routes and aircraft with the beginning of the Winter Timetable that takes effect on October 31. These flights will operate under LH’s Eurowings LCC division, and no, the aircraft will not be repainted to match EW or LH liveries!
This does not affect Air Berlin’s operations in Dusseldorf or Berlin. Flights to and from those cities will continue to be operated by Air Berlin.
Why is Lufthansa willing to do this?
Well, it’s basically taking a bullet for Air Berlin and trying to build out Eurowings at the same time.
Air Berlin is bleeding money faster than it can make it, and it’s Mid-Eastern overlord, Etihad, is becoming growingly impatient with operating results after making a substantial investment into AB’s business. If Air Berlin continues its current path, it faces no option other bankruptcy and being thrown on the pile of other failed European LCC airlines.
Lufthansa almost has no choice but to enter this unholy alliance with Etihad to help save Air Berlin. Otherwise, should Air Berlin disappear, the vacuum that would be created would suck in competitors such as Ryanair, EasyJet, Norwegian, etc. to fill in the void left by Air Berlin. Lufthansa is simply playing defense to protect their own market. As strange and unorthodox as it may appear, it is actually LH’s only choice if it doesn’t want to see even more foreign competitors flying in and out of German airports. At the same time, Eurowings is not big or successful enough to take on any void left by AB, so Lufthansa needed to step up and help cushion what appears to be the imminent failure of Air Berlin.
Should AB fail, at least Lufthansa is there to catch the pieces and immediately increase the size of Eurowings with the demise of AB. Lufthansa has said all along that Eurowings would be used to absorb other Euro LCCs should any of them be at risk of failure. Air Berlin will simply be the first airline to test LH’s experiment.
by Lufthansa Flyer | Sep 9, 2016 | Eurowings, Featured, Lufthansa, Munich |
The strategy of operating a low cost carrier SPECIFICALLY NOT out of a major hub has apparently been scuttled.
According to Eurowings boss, Karl Ulrich Garnadt, Eurowings (Lufthansa’s low cost carrier division) will begin operating flights out of Lufthansa’s #2 hub in, Munich. No date has been announced, but it was indicated that Munich operations for EW would begin sometime in 2017.
The rationale behind the change in the Eurowings business model is to stave off LCC competition that is beginning to build in Munich thanks to other LCC operators such as Easyjet and Norwegian among others. However, there are inherent risks with the idea, one being labor and the other being the impact on Lufthansa’s mainline operations.
As the Eurowings concept was built out, Lufthansa had worked with Unions to ensure that there would be no conflict of interest when it came to Eurowings and Lufthansa crews. Bringing the 2 carriers in direct competition in Munich may not sit well with Unions who typically have an itchy trigger finger when it comes to calling strikes for trivial reasons.
Another almost certain unintended consequence with this move is the risk that Lufthansa mainline operations will lose passengers to Eurowings. EW and LH would be in direct competition for the same passengers. Fares wars within the same airline group?
Not only will this impact short haul Munich operations for Lufthansa, it will almost certainly impact long haul operations as well. Booking a combination of EW and LH flights on one ticket is not an easy task, nor is the ability to connect from an EW flight to one operated by Lufthansa, and vice versa. A lot of systems work will be needed to marry the 2, and thats on top of Eurowings’ existing systems challenges that they are working through.
I see this as a reactionary move and an attempt to reduce the impact of non-LH LCC airlines in Munich, but in reality I don’t see how this will be possible since Eurowings is suggesting that only 4 or 5 aircraft would be assigned to Munich, hardly enough to make a significant impact on the competition, but enough to hurt itself and the parent company. EW already has its set of challenges and I think that they are stretching themselves a bit too thin in opening this new ‘front’ on the war against other LCCs. This defines dabbling and experimenting, not a commitment. Bandaids do not heal wounds.
It would be wiser for EW to be proactive and perfect their product that currently has it challenges and not enter a new arena with a business model designed for anything but operating out of major hubs, especially Lufthansa’s. Perfect the EW model so that it allows Lufthansa to consolidate other European LCCs into Eurowings when the opportunities arise. Don’t dilute what at best is a marginally successful unit (most would even argue that it is not yet successful).
In my humble opinion it’s a case of ‘Ready, Fire, Aim’.
I’d like to be proven wrong, but I wouldn’t bet against me.
