Skift Take
Lufthansa Group was terrified it would repeat past mistakes, so it built an airline to compete with Norwegian Air and other low-cost, long-haul carriers. Now that airline, called Eurowings, is kaput, and Lufthansa can chalk up another mistake.
Lufthansa Group on Monday killed what may have been its worst strategic blunder of past decade when it said its Eurowings subsidiary will stop flying long-haul routes. The announcement came a week after the company said the subsidiary will lose more money this year than expected, a result that will reduce group earnings.
Good riddance.
Having Eurowings fly some North America and Asia routes always felt as if it was a solution to a problem that didn't exist. Yes, for a short time, as recently as three years ago, it seemed Norwegian Air and its ilk would take over the world, putting established carriers out of business. That threat has fizzled.
During the short period Norwegian looked like a disruptive competitor, no company overreacted like Lufthansa Group. As Norwegian kept (unprofitably) growing, Lufthansa ramped up its response, sending Airbus A330s to Eurowings, an airline the group conceived earlier to combat the low-cost, short-haul threat. Lufthansa moved so fast it failed to build a cohesive airline; what passengers thought was a cohesive brand was a mishmash of airplanes and crews.
In its rush, Lufthansa seems determined not to repeat past mistakes. No doubt Lufthansa and its competitors miscalculated 15 years ago how much their business would change because of Ryanair, EasyJet and others.
Those airlines remain major problems, which is why Eurowings will keep flying short-haul routes, even though the best-case scenario outlined Monday doesn’t have the new Eurowings breaking even until 2021. Eurowing's short-haul operation may never be a big money maker, but it's probably not a bad defensive br
