Did Lufthansa Group Overreact to Low-Cost, Long-Haul Threat?
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 fail
