Furthermore, the company encounters indirect competition from railway and bus transportation services, as well as alternative travel options like video conferencing for businesses. With Eurowings, the Lufthansa Group has an innovative and competitive offering in point-to-point traffic, which addresses both price-sensitive and service-oriented customers with low-cost basic fares and additional service options that can be booked flexibly. In its international strategic alliance strategy, Lufthansa has adopted a cooperative strategy form of strategic alliance which is non-equity in nature. In future, these goals will be achieved by means of an integrated product approach. The company could focus on ancillary services to diversify its portfolio, improve revenues, and enhance the overall customer experience. Service activities of Lufthansa Deutsche can include part supply, training, post sales maintenance, installation services, and product forward and backend alignment of software. Three large Gulf carriers, Emirates, Etihad Airways and Qatar Airways, as well as Turkish Airlines, now stand to compete with Lufthansa on the traditionally profitable long-haul segment. He answered the question in two parts How companies benefit or limited by the structure of their industry, and second a firms relative position within that industry. Step 7 - Organizing & Prioritizing the Analysis into Lufthansa 2012 Case Study Solution Conversely, since 2022 additional state-of-the-art long- haul aircraft like the Airbus A350-900 and Boeing 787-9 technology have strengthened the Lufthansa Group fleet. Air Canada remains determined to succeed | Business Chief Condor is introducing a new business class seat that gives its a competitive advantage to Lufthansa, at least for now. Although there may be some short term strategic value in seeking regulatory protection against new strong competitors, Lufthansa's preoccupation with protectionist measures both diverts resources and ingrains a backward looking culture. It also touches upon business topics such as - Marketing Mix, Product, Price, Place, Promotion, 4P, Policy, Strategic planning. Setting aside arguments concerning the validity of claims that the Gulf-based airlines are government subsidised and that they provide unfair competition, this instinct is a threat to Lufthansa because it implies that its mindset is not yet completely right. Is Tesla's AI Tech its Biggest Competitive Advantage? Starting in 1988, European governments deregulated the European airline industry in preparation for a single European market. Increased international competition affects market share ofLufthansa, 2. With the targeted ongoing development of the product portfolio, an increasingly individualised choice of selectable product components, an improved travel experience on the ground and on board, an interactive and personal dialogue, solution-oriented and accessible customer service and rapid digital solutions throughout the travel chain, customers are acknowledged as individuals and receive tailored solutions. Furthermore, the company generates supplementary income through collaborations, partnerships, and investments in other aviation and travel businesses, such as codeshare agreements with other airlines and its membership in the Star Alliance network. The Lufthansa group (including its minority stake in Brussels Airlines) has five hubs: Frankfurt, Munich, Zurich, Vienna and Brussels. For example, the use of sustainable travel solutions will be rewarded with additional miles or other benefits. Lufthansa now plans to expand its use of Eurowings, whose pilots operate outside the collective agreement and whose unit cost is some 20% lower than that of Germanwings (according to Lufthansa). Through Compensaid and Squake, the Lufthansa Group offers passengers with the Groups own airlines and also those travelling with other airlines the option of reducing CO2 emissions by purchasing sustainable fuels (SAF) or offsetting them through high-quality climate protection projects. In two business models network airlines and point-to-point airlines they serve the relevant customers and market segments with dedicated brands and differentiated service promises, connecting Europe with the world. Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications. Growing LCC competition remains a threat to the Lufthansa group, particularly as competitors such as easyJet and Ryanair are now targeting the high yield business travellers that are vital to legacy airline profitability. Lufthansa is one of the largest & founding member of Star Alliance 2. Some factors like increased competitor activity, changing government policies, alternate products or services etc. The Lufthansa Group is one of the biggest airlines worldwide and a leading European airline group. It is attempting to do these things more than at any time in the past, but must go further and fully overcome the damaging instinct to complain about unfair competition. Dialogue with the Companys stakeholders is also a component of sustainable corporate governance. MySQL vs SQL Server: Which one is better? Some important factors in a brand's strengths include its financial position, experienced workforce, product uniqueness & intangible assets like brand value. Moreover, Lufthansa is dedicated to embracing sustainability and working towards a greener future, continuously striving to reduce its environmental impact while maintaining economic success. Diversity and equal opportunity are a matter of course. According to Michael Porter Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry. Their commitment to quality, reliability, and innovation positions them as a leading airline in the international market. Elon Musk's persistence. Competitive Advantage Additionally, heavy investment in maintaining safety policies and adhering to environmental regulations contribute to overall costs. FeaturedMeeting Opening Reflections To Enhance Business Productivity, Starbucks: Business Model, SWOT Analysis & Competitors, Biomedical Engineer Salary And Job Description, How To Have Structured Meetings Every Day. It symbolizes Lufthansa's heritage and role in air transportation. Andrea J. McCampbell, MBA, PMP, CSM, RDN - LinkedIn A full rift would mean new strategies for each. Cooperation with partner airlines is becoming more important, in order to strengthen market presence in key traffic regions. The safety of flight operations is and will always be the top priority. Firm infrastructure support activities at Lufthansa Deutsche consists activities such as legal services, general management, planning, quality management and finance and accounting. Key targets are the systematic renewal of the fleet to cut fuel consumption, reduce carbon emissions and trim the number of aircraft models by retiring and phasing out older, less efficient aircraft. To improve its range of products and services, Lufthansa Technik is making increased use of data-based, digital solutions, focusing its portfolio on higher-margin segments such as medical goods and utilising attractive growth potential. Lufthansa Group: International Growth Strategy | Free Essay Apples scale makes even the worlds largest banks look little. As Lufthansa continues to grow and evolve, it is well-positioned to remain a leader in the global airline market, setting a benchmark in excellence for others to follow. As with LCC competition on short haul, competition in long haul markets from the Big Three Gulf carriers (Emirates, Qatar Airways and Etihad) and Lufthansa's Star Alliance partner Turkish Airlines is not going to go away. The Company is moreover modernising and expanding its cargo centre in Frankfurt, in order to participate in the growing airfreight market. See related report: Germanwings has preserved Lufthansa's market share, but still has too many legacy issues for a LCC. Matthias Hild (2018), "Deutsche Lufthansa AG: A Competitive History Harvard Business Review Case Study. Strategic alliances and acquisitions with other airlines or companies in related sectors can offer the benefit of network expansion and cost reduction. This includes their membership in the Star Alliance, which expands their global presence and offers joint loyalty programs and shared lounge access. 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As illustrated in the Value Chain diagram, Lufthansa Deutsche has five generic categories of primary activities . Lufthansa: a joint venture with Air China could mean almost half its ASKs are covered by JVs, Air China-Lufthansa Group JV will control 35% of China-Europe,market while easing growth tensions, Germanwings has preserved Lufthansa's market share, but still has too many legacy issues for a LCC, Lufthansa's planned new lower cost long-haul airline must avoid legacy issues, Ryanair lags easyJet on business traveller & customer service initiatives; both have great potential, EasyJet SWOT: you must be getting things right if Stelios has gone quiet, Emirates Airline to make the United States its third largest source of revenue, US airlines take aim at the Gulf carriers when perhaps they would be better woo-ing them, Etihad raises its Europe profile with codeshares and equity, expanding indirect connections, Lufthansa ends codesharing with Turkish Airlines. WebLufthansa increases efficiency by 30%, gains flexibility and departmental autonomy 30% time savings in data preparation and analysis Increased autonomy through self-service The entire travel experience is intended to be individual, flexible and intuitive.