Air Transport World

A class act. (airline Deutsche BA)(Company Profile)

Deutsche BA is challenging Lufthansa in German domestic markets with lower costs and comparable in-flight service

MUNICH-- Deutsche BA never will be a real threat to German giant Lufthansa. But the country's second-largest scheduled airline has made its presence known since starting service nearly four years ago.

The carrier, controlled by a consortium of three German banks and British Airways, is able to compete with Lufthansa by providing comparable--if not better--in-flight service for a lower fare. The airline offers business and economy classes on its jet fleet and a 1-class business product on its turboprop equipment. Business travelers account for around 75% of its traffic on the turboprop side, 60% overall.

Since introducing the more-for-less concept last year, Deutsche BA's passenger volumes and market share have risen continuously. This past April, for instance, the airline posted a 37% market share on its four Berlin routes to Dusseldorf, Cologne/Bonn, Stuttgart and Munich, on which jets are used. Nearly 75% of its passenger volume is in the domestic market.

"We can afford to offer both [service and price] because we have a much leaner structure," claims Managing Director Richard Heideker. Labor costs account for around 12% of the airline's annual budget. Most of the carrier's 680 employees are nonunion.

But two can play that low-cost game. Deutsche BA had been knocking on the door of profitability and would have been let in, if not for the damaging recent fare war with Lufthansa. …

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