Lufthansa Galaxy: a guide to multi-hub strategy and airlines (waiting for Ita Airways)

A real European colossus from 102 million passengers per year (it was 145mln in 2019 before the pandemic, ed.) , which has nearly 110 thousand employees, 32.8 billion euros in revenues and 5 strategic hubs.

Lufthansa is the second largest Group of commercial aviation in Europe, behind Ryanair, but is the leader in intercontinental connections thanks to a strategy of alliances (founder and big player of Star Alliance) and acquisitions of other companies airline that over the past 10 years has seen the German holding company become the leading player in the skies.

The European advance

An advance that does not seem to have ended and has led LH to continue its growth targets, partly as a result of the industry consolidation taking place in Europe and the increasing competitiveness of the low-cost sector, see just Ryanair and rising star Wizz Air.

Not just the sale of ITA to Lufthansa, Air France and others: the big maneuvers in European skies

This is also why the German giant is pursuing and is intent on completing the acquisition of the homegrown Ita Airways, which brings in a dowry of routes, slots, networks both domestic and international for what the LH ceo himself, Carsten Spohr, he called "the second most important European market for us."

But let's look in detail at how Lufthansa's strategy in Europe is configured, with individual airlines and their goals.

Lufthansa, Austrian and Swiss queues.

The Group's 5 hubs

The Group's passenger segment includes "mother" Lufthansa German Airlines, Swiss airline Swiss Air (including the regional Edelweiss rib), Austrian Airlines and the Belgian Brussels Airlines.

In addition, the Group's multi-hub strategy offers passengers for each individual airline a Hub-and-Spoke connection model - classic of legacy carriers-which involves concentrating both domestic and intercontinental operations at one airport making connector, in fact.

The LH Group, therefore, at this time counts with the two German hubs of Frankfurt and Munich, and those of the respective nationals at Zurich, Vienna and Brussels. The forthcoming entry of Ita Airways plans, in German plans, to create the sixth hub in this multipolar strategy.

The Lufthansa checkerboard: buys Ita Airways, but strengthens Air Dolomiti

All these companies also share the same loyalty program, Miles&More, with the ability to earn miles and points (and redeem them accordingly) by flying with any Group carrier to any destination.

Lufthansa's mini-galaxy.

But for Lufthansa, this model is not enough: over the years, it has created several subsidiaries with the aim of feeding traffic to Frankfurt and Munich with leaner, more efficient airlines and less expensive.

This mini-galaxy includes Lufthansa CityLine, the Italian Air Dolomiti, and the dual point-to-point Eurowings and leisure version Eurowings Discover. Recently, the German group also announced the launch of Lufthansa City Airlines: yet another rib that will be based in Munich.

In total, the group has 614 aircraft in its fleet: 386 for Lufthansa and subsidiaries, 107 in dowry for Swiss Air, 63 for Austrian, 46 for Brussels, and 96 for Eurowings.

City Airlines, why Lufthansa Group launches yet another airline

The evolution of Lufthansa

As mentioned above, therefore, "mama " Lufthansa German Airlines includes all of its ribs, including Air Dolomiti, and manages all of its operations around the two main airports of Frankfurt and Munich. In 2022 it carried 51.784 million passengers for over 400 thousand flights operated.

Meanwhile, he is conducting a real fleet modernization: last year it received its first two Boeing B787 Dreamliners, and seven Airbus A320s and four A350s for long-haul will be added later this year.

Photo credit: Deutsche Bahn

Meanwhile, he enhanced the train+airplane intermodal partnership with Germany's Db-Bahn railways, bringing them into the Star Alliance.

Lufthansa's cabin revolution begins: double bed in first class and double suite in business class

Finally, with a total investment of 2.5 billion euros in products and services, Lh has launched the new "Allegris" cabins for First and Business class that will be installed on more than 80 aircraft that Lufthansa will receive over the next few years-Boeing 787-9, Airbus A350, and Boeing 777-9. The first onboard configurations will be ready starting in 2024.

Swiss's winning model

With 15.050 million passengers last year, Swiss Air is the second largest airline of the Group outside Germany and is the one that has achieved the best growth results in terms of both passengers and profits. In fact, with a positive Ebit of 472 million, it did much better than Lufthansa itself.

With its base in Zurich, many intercontinental routes, and its model geared toward a high-spending target audience in both business and leisure, Swiss is the best example Of an airline that has risen again after hitting rock bottom.

Flying First with Swiss from Geneva to New York. Riccardo's trip report

In October 2001, Swissair aircraft, after 71 years of operation, were grounded for lack of liquidity following the collapse of the aviation market after the September 11, 2001 attacks. In 2005, Lufthansa joined Swiss (born from the ashes of Swissair) under 11%, and then came to take over three years later.

Brussels and Austrian operations

Just as with Swiss, Lufthansa has operated in the same way, but with alternating luck, with Brussels Airlines (entered in 2008 with the 45% and totally taken over in 2016) and Austrian Airlines (initial purchase of 41.6% in 2008 arriving at 94% of shares the following year).

Flying to the Maldives in basic economy with Austrian. Ok the price is right, but the rest just isn't

These operations have been a bit more complex and time-consuming, but at the moment the two carriers seem to have found their stability. Austrian carried 11.142 million of passengers (on the levels of Ita Airways, to be clear) and ended the year with very positive results counting on an extensive network in Central Europe and important long-haul connections; while Brussels reached 6.892 million passengers with a network focused on connections to Africa.

Both vectors have repaid the Covid loans received during the pandemic from their respective national governments and are renewing the fleet with the addition especially of the A320neo Dedicated to the medium range.

The Eurowings case

With 16.969 million passengers Eurowings is Lufthansa's big bet to compete with the low-cost biggies in Europe. Although its financial results are still not very good, the carrier continues to expand its operations by focusing on the point-to-point model and on routes who travel from Germany and Central-Northern Europe to the purely Lesiure destinations in Spain, Southern Europe and the Caribbean.

Volotea and Eurowings forge an alliance, joint sales and new routes

Eurowings also consists of two branches: Eurowings Germany (including the Discover brand, which offers flights from Germany to European and Caribbean destinations) and Eurowings Europe which instead covers pan-European airports with bases in Palma de Mallorca, Salzburg, Prague, Stockholm and Pristina and will open a new base in Graz, Austria.

Copying the models of Ryaanir and Wizz Air, in addition, Eurowings Europe will gradually transfer all operations to Eurowings Europe Limited, a new company that will have its fiscal headquarters in Malta. With the introduction of the A321neo, moreover, Eurowings would now also like to expand its operations to more distant destinations: from Dubai to Cape Verde

Finally, in recent months, there has been much interest in the resounding codeshare agreement between the low cost Spanish Volotea and Eurowings. According to those involved, this would by no means be the first step toward further integration, but in LH's air transport strategies anything is possible.

The Air Dolomiti model

As recounted in previous rounds, finally, Air Dolomiti's "suspender" model remains strategic pr LH, despite the investment in Ita. In February Air Dolomiti was operating from major Italian airports to Germany with more than 550 weekly flights on Lufthansa's hubs of Munich and Frankfurt. But as of April 1, here's the news: Air Dolomiti opens Two new bases in Italy: Florence and Venice, adding to his home, Verona.

The opening of the bases implies the placement of aircraft and personnel at the two airports and a major growth in flights for the summer ( and beyond). Lufthansa, in fact, is reportedly diverting to Air Dolomiti More and more LH-branded routes from Munich and Frankfurt for various Italian airports (and vice versa).

A move aimed at rationalizing the network as Air Dolomiti operates with smaller aircraft and lower costs. The German group's Italian airline has 19 aircraft: 17 122-seat Embraer 195s and two Embraer 190s 108-seat aircraft just joined the fleet. And more aircraft should be on the way soon.

The Lufthansa checkerboard: buys Ita Airways, but strengthens Air Dolomiti

The external influence on Lot and Croatia

Returning, however, to the Miles&More loyalty program there is another piece to be added to the German giant's strategy. That of external influence. Lufthansa, in fact, through its loyalty program and codeshare agreements has extended its presence to Eastern Europe as well: in addition to the 40 Star Alliance member airlines, in fact, some carriers such as Lot-Polish Airlines, Croatia Airlines, and Greek Aegean allow their passengers to earn miles from LH's program.

Lot and Croatia, moreover, they do not even have their own loyalty program and are therefore tied in knots with the Germans. In this context, it is foreseeable that, in the future, Lufthansa's takeover operations might look precisely at these carriers, which especially after the pandemic do not have very sustainable balance sheets.

The future of Ita

As for Miles&More and the future of Ita Airways. - once Lufthansa enters with 40% shares - the ceo Fabio Lazzerini clarified just in recent days that no merger with the Volare program will take place, although Ita will join the Star Alliance.

ITA Airways, Lazzerini confirms, "We will join Star Alliance, Volare remains and there will never be an award chart"

If this will be LH's decision in the first instance, the solution may be the opposite when LH tries to take the tricolor carrier's 100% by ferrying Ita into Miles&More.

In the Lufthansa strategy, then, there is a triple movement: direct acquisition of airlines (in addition to Ita Airways, the German giant has not ruled out possible new acquisitions ranging from Tap Air Portugal to Lot); organic growth simplified by the creation of new lighter airlines such as Eurowings or City Airlines; and the external influence through the Miles& More program and codeshare agreements (see Lot, Aegean, Croatia Airlines and Volotea).