Eurowings Intercontinental

[White Light]

Here is an extract from Lufthansa's statement or press release (with compliments from forum member André) :

"In addition to its European network, the ‘New Eurowings’ will also begin to add long-haul services to its low-fare product range from the end of 2015 onwards, in collaboration with German-Turkish airline SunExpress. To this end, a Letter of Intent has been signed with SunExpress, a joint-venture company of Lufthansa and Turkish Airlines, under which the intercontinental services to be offered under the Eurowings brand will be flown under the air operator certificate (AOC) of SunExpress Deutschland and with SunExpress Deutschland cockpit and cabin crews. "

A question to the experts on the forum :

I thought LH and TK were no longer friends (code shares between Germany and Turkey ended by LH if I'm not mistaken).
LH wants to operate the Eurowings long haul flights with a German AOC and German crews through the existing joint-venture, SunExpress, between LH and TK.
Why a German-Turkish joint-venture if you operate with a German AOC and German crews ?
There, I am completely lost. Foes become friends again for part of their operations ?

Who can shed some light on this for me ?

[RoMax]

TK and LH compete head-on, but in certain ways still cooperate. I know some managers working for Turkish Airlines, that travel to Germany multiple times per month to meet with Lufthansa.

SunExpress is indeed a 50-50 JV between TK and LH, altough both are not the best friends anymore. But SunExpress is doing quite well and serves a different market than both TK and LH, so there is no reason for either of them to pull the plug from this JV.

About this Eurowings thing. You have to know that SunExpress (a Turkish registred and headquartered airline, in Antalya) has a German daughter company, SunExpress Deutschland that operates out of Germany with a German AOC. Besides Turkey, it flies to Egypt, Greece, Tunesia and Morocco out of Germany (and maybe more in as charter in summer?). This is the one that will do the operations of Eurowings. So it will be a German division of a Turkish JV of TK and LH doing the long haul operations for Eurowings.

Yes it might be a bit weird to use SunExpress for this because TK is involved, but probably SunExpress has a lot of advantages to do these operations under the Eurowings brand instead of another division of LH doing it.

[White Light]

Thanks ! Still a weird construction, as you say. Btw, forgot to mention that the livery looks very much (to me) like the Luxair livery. Designers have no imagination anymore !

https://www.aviation24.be/wp-content/uploa ... 0_A330.jpg

[euroflyer]

I guess the solution to the eurowings / sunexpress issue is not that difficult:

LH needed a German AOC for its new eurowings operation, otherwise there would be no acceptance by the public. On the other hand it could not be an AOC from within Lufthansa itself and there could not be one founded by LH, BECAUSE of the existing collective agreements (mainly with the pilots ...), as otherwise the existing working conditions for the LH pilots would be applicable for the eurowings operations as well.

The German daughter of the Turkish LH / TK joint venture has its own German agreements with different working conditions than those of LH (incl. GermanWings, LH Cityline, etc.). This is the main reason.

And it is at the same time the real reason for the continuing conflict between LH and its pilots (even if the pilots could not go on strike about this under German labour law - therefore they continue the conflict about the pre-retirement which otherwise would have been solved long time already ...).

LH build this construction to be able to compete with airlines like Norwegian, which uses pilots based in Singapore and cabin crew based in Bangkok to staff its flights between EU and US for example ... this could not work with pilots and cabin crew being covered by the existing German collective agreements of the LH group ...

[Flanker2]

Another LH project that has failure written all over it.
The A332 isn't built for a LCC operation.

[RoMax]

The A332 is just an interim solution until 787's or A350's become available, they've said that multiple times. Same as Scoot started some years ago with 777's and will soon start taking 787's instead.

LH rather wants to take higher initial losses than to continue doing nothing at all. Besides, it has to be seen how LCC these operations will really be. I see it more as a hybrid product which doesn't fit under the Lufthansa brand which has "high prices" and "expensive" written all over it. SunExpress on the other hand has a strong brand recognition in Germany, but a more 'cheap' one.

[Flanker2]

The Sunexpress brand doesn't matter as the brand will be Eurowings.
Oh, and Germanwings will also become Eurowings...?
What an idiotic concept.

IMO LH is joining AF in the ranks of the airlines who are run by corporate suits who don't have any vision or creativity. They' ve run out of luck as the industry is now in the hands of the creative ones, and they're running out of time/money.

The next downturn is around the corner, with an epicentrum in Europe.
And for me, this means that we're going to see big downsizings at the major airlines. It wouldn't surprise me if LH is forced to dump this Eurowings project and cut down on its route network significantly.

I don't know what newspapers they're reading at LH, but if Europe goes for QE just a step ahead of a new financial crash, I have no idea how low the Euro is going to fall. That's going to bring a new crisis by itself, as it will take time before a cheap Euro translates itself in increased exports.
In the meanwhile, consumers are going to take a huge hit on inflation and it's going to affect any form of spending that requires a budget.

For me it's too late for QE now. It's just going to drive us over the cliff faster than we're already going.
I remind you that the Euro is in the 1,23 USD area already and QE isn't going to save it from going below the dollar. We're already falling against the Yuan, so it could be reduced to paper value.
Governments need to take control of their finances and print their own currency so that the Euro becomes an accessory currency.

I think that LH will not be able to do anything with a bunch of A332's or A340's.
Scoot didn't work so far and they're hoping for the B789's to change that, but I doubt it will change anything if the margins are so unreliable.
So IMO this project is destined to fail.

If LH really want to make money with longhaul, they need to change their attitude towards the customer.
Offer an awesome service at an awesome price or keep their services at a much lower price.
The days of milking corporate customers are over, they need to fight for each and every one of them now.

[Inquirer]

if Europe goes for QE just a step ahead of a new financial crash, I have no idea how low the Euro is going to fall. That's going to bring a new crisis by itself, as it will take time before a cheap Euro translates itself in increased exports.
In the meanwhile, consumers are going to take a huge hit on inflation and it's going to affect any form of spending that requires a budget.

For me it's too late for QE now. It's just going to drive us over the cliff faster than we're already going.
I remind you that the Euro is in the 1,23 USD area already and QE isn't going to save it from going below the dollar. We're already falling against the Yuan, so it could be reduced to paper value.
Governments need to take control of their finances and print their own currency so that the Euro becomes an accessory currency.

As to your aviation 'analysis', I will not comment, but allow me to say there's a whole lot of economic BS in one paragraph there, so much I don't even know where to start in order to still make any sense at all from it.

It's not the first time I've told you your economic knowledge is very rusty at best, so best would be for you to simply review basic macro-economic principles and their correlation with monetary policy before trying to sound smart, because there are at least 3 fundamental errors in what you're saying which would make you fail any practicum exam at university on the topic you absolutely want to lecture people on.

Believe me, I've given the course as an assistant in Leuven for several years and you've just failed the exam, sir.

[Flanker2]

Assistant in Leuven hun? So where do you see any issues with my paragraph?
Care to explain with your "knowledge"?
There is little to be wrong about in there, it's called common sense.
Perhaps you would want to review your textbook's chapter on monetary supply and inflation? Because after all, it's students from your fancy universities who are destroying our economies with their stupid monetary policies.

To give you an example: Herman Van Rompuy.
He is an alumni of your fancy university, yet all he's done is dug us deeper into a financial hole and even put us back at the brink of a cold war with Russia.

No wonder that Europe is in it this deep. When the professors at our universities don't even have a basic notion of how inflation works, how do you expect their former students to come up with sustainable solutions?

[JOVAN]

if Europe goes for QE just a step ahead of a new financial crash, I have no idea how low the Euro is going to fall. That's going to bring a new crisis by itself, as it will take time before a cheap Euro translates itself in increased exports.
In the meanwhile, consumers are going to take a huge hit on inflation and it's going to affect any form of spending that requires a budget.

For me it's too late for QE now. It's just going to drive us over the cliff faster than we're already going.
I remind you that the Euro is in the 1,23 USD area already and QE isn't going to save it from going below the dollar. We're already falling against the Yuan, so it could be reduced to paper value.
Governments need to take control of their finances and print their own currency so that the Euro becomes an accessory currency.

As to your aviation 'analysis', I will not comment, but allow me to say there's a whole lot of economic BS in one paragraph there, so much I don't even know where to start in order to still make any sense at all from it.

It's not the first time I've told you your economic knowledge is very rusty at best, so best would be for you to simply review basic macro-economic principles and their correlation with monetary policy before trying to sound smart, because there are at least 3 fundamental errors in what you're saying which would make you fail any practicum exam at university on the topic you absolutely want to lecture people on.

Believe me, I've given the course as an assistant in Leuven for several years and you've just failed the exam, sir.

Here is a corporate traveler who read and understood Flankers analysis.
He is quit right to say that the times are over for arrogance and ignoring customers preferences.
LH still honours a last century policy. Like AF and others.
ME airlines take over with super modern fleet, super modern airports and one stop flights to almost every place you can imagine.
I am fed up with LH and star alliance's old fashioned looking down at customers.
Their loyalty program is a rip off.
QR EK and others are BETTER and CHEAPER and MORE RESPECTFUL.
The choice becomes easy to make now.

[Inquirer]

Assistant in Leuven hun? So where do you see any issues with my paragraph?

you have cause and consequence of QE upside down
you completely misunderstand 'inflation'
you fail to grasp the concept of 'money'
so back to the classroom for you!

There is little to be wrong about in there, it's called common sense.

It's called 'toogpraat', which has little to do with economic reality as it omits quite a few important elements for the sake of simplicity, yet which make your conclusions completely wrong.
its something I've noted quite a few times with posts made under your account, btw...

Perhaps you would want to review your textbook's chapter on monetary supply and inflation? Because after all, it's student from your fancy universities who are destroying our economies with their stupid monetary policies.

Sure, all idiots, but you, right?
still waiting to read your professional credentials btw.
I've asked for them several times, yet still waiting to hear them, you know?

[Passenger]

Another LH project that has failure written all over it.

The Sunexpress brand doesn't matter as the brand will be Eurowings. Oh, and Germanwings will also become Eurowings...? What an idiotic concept.

IMO LH is joining AF in the ranks of the airlines who are run by corporate suits who don't have any vision or creativity. They' ve run out of luck as the industry is now in the hands of the creative ones, and they're running out of time/money.

If LH really want to make money with longhaul, they need to change their attitude towards the customer. Offer an awesome service at an awesome price or keep their services at a much lower price. The days of milking corporate customers are over, they need to fight for each and every one of them now.

Allow me to react with a remark I’ve posted in another topic which was turned into a LH topic:

This topic is a technical discussion about take off settings, but yet Flanker posts an Australian Yahoo article from June 2011 about a FAA audit into Lufthansa Technik Philippines in Manila. There was no suspension of a license, but yet Flanker brings it up to proof that Vietnam Airlines, quote, “comes a long way from where they were before”. The reason for that: "because they work with Lufthansa Techniks".

I really don’t understand why the moderators allow this kind of behaviour post after post, time after time. Posts like the above are totally off topic and are only meant to show his hatred against Brussels Airlines and/or Lufthansa. And worse: they prohibit a normal discussion.

[euroflyer]

QR EK and others are BETTER and CHEAPER and MORE RESPECTFUL.
The choice becomes easy to make now.

Yes, I guess they really are. But how can they be so cheap and so good at the same time? Yes, they might have a good management, agreed. However, the main reason is: they have more or less unlimited state sponsorship, they get airports built as their home hubs as they want them, they probably have access to all kind of ressources at cost levels LH, BA and AF can only dream of, their national governments do not require them to pay additional taxes to pay for climate, security or whatever issues and does not want to make it unattractive for people to fly, they employ staff at least in parts of their operations at their home bases at conditions nobody in Europe would accept, etc.

It is great we can take advantage of all those things and we can feel so good when we fly in such a great atmosphere and still so cheap. But I guess it is not what we would call "sustainable behaviour"?! No problem, we should just be aware of what we do and what the long term consequences will be ...

[Flanker2]

Yes, I guess they really are. But how can they be so cheap and so good at the same time? Yes, they might have a good management, agreed. However, the main reason is: they have more or less unlimited state sponsorship, they get airports built as their home hubs as they want them, they probably have access to all kind of ressources at cost levels LH, BA and AF can only dream of, their national governments do not require them to pay additional taxes to pay for climate, security or whatever issues and does not want to make it unattractive for people to fly, they employ staff at least in parts of their operations at their home bases at conditions nobody in Europe would accept, etc.

It is great we can take advantage of all those things and we can feel so good when we fly in such a great atmosphere and still so cheap. But I guess it is not what we would call "sustainable behaviour"?! No problem, we should just be aware of what we do and what the long term consequences will be ...

Sure, they might be sponsored by oil or other sources, but LH and other legacy airlines are making their job much easier with their low service and high fares.

As Jovan points out, the ME carriers are tough competition. Good fares, great product and good service.
I would like to add one more headache for the European legacies: Asian carriers.

Even though we don't hear much about SQ these days, they are still a top notch airline.
Frankly, there are also other gems that might expand their European operations in the future.
Air asia X is defintely one to look out for as Tony Fernandes has already said that he's going to use the A330 NEO's to Europe.
Also very interesting to look at are JL and NH, given the shear market size of Europe-Japan travel. They are postponing retirements of their B767's and using those to expand in Asia, which is a good bet given falling oil prices. They are clearly positioning themselves to become major players on the Pacific routes. In the meanwhile, they are also mulling new european routes.
JL has stopped many European routes during its bankruptcy, including Rome and Amsterdam. With their new Sky Suite product they have the best hard product of any airline in Y and Y+, while their J product is top notch along with F (see http://www.flyertalk.com/forum/23916867-post8.html ). If JL expand their European offering with the many B787's they still have on order and the A350's, I can see many Chinese pax connecting to Europe with them rather than with ME carriers, as they have much better access to China with more frequencies, three times as many destinations and a culture of respect and dignity, which Chinese don't get everywhere, often not even at home. The detour is about the same anyway.

[Didymus]

Apart from the 'tiny detail' that the Chinese and Japanese hate each others guts.

[euroflyer]

At the end of the day the equation is quite simple: If we have open skies for each and every airline to fly from / to Europe there is no way ANY EU airline employing its staff in Europe, paying its taxes in Europe and applying all other kind of regulations we do have in Europe will be able to compete in the long run with a well managed airline from the middle east or many parts of Asia. US airlines might be in a comparable situation to the European ones at the end of the day. Most other airlines around the world however have lower wage bills, lower operating costs at their home bases, pay less taxes, get more state support etc. They have to be cheaper and they can easily offer higher service levels because of this structural advantages.

EITHER
we accept this and we will see the European legacy carriers to be replaced by those ME and Asian airlines plus a few "European-looking" airlines (like Norwegian and others) which have their company home bases in tax havens and employ staff from abroad at "Asian or ME conditions"
OR
we regulate market access in Europe

[Flanker2]

Apart from the 'tiny detail' that the Chinese and Japanese hate each others guts.

If this was 10 years ago, you would be right.
I suggest you to pay a new visit to Japan.

Already at the airport, you will see that immigration lines are stuffed with and staffed by Chinese people.
I was in Akihabara recently and many major stores were staffed by Chinese or Chinese-speaking people with a huge amount of Chinese visitors.

If you can recognise them among the Japanese, you realise that Tokyo is really full of Chinese now.
One Tokyo-based realtor I spoke to said that Chinese are buying huge amounts of property and are his best customers at the moment.

Chinese tourists are dismissing political tensions and heading to Japan in record numbers to take advantage of a weaker yen and easier visa rules.

The CHART OF THE DAY shows the year-on-year growth rates of visitors to Japan since July 2013 from Taiwan, South Korea, China and the U.S., the four largest tourist sources. China overtook all three in July, with the number of travelers reaching an all-time high of 281,309, and has remained in the top spot, according to the Japan National Tourism Organization. The lower panel tracks the Chinese yuan’s performance against the yen, Taiwanese dollar and Korean won since last year.

http://www.bloomberg.com/news/2014-11-0 ... e-day.html

[Passenger]

Quote from the initial Lufthansa press release: "...The first intercontinental destinations to be served will include points in Florida, Southern Africa and the Indian Ocean..."

First intercontinental destination is known: Tampa, Florida.

[sn-remember]

At the end of the day the equation is quite simple: If we have open skies for each and every airline to fly from / to Europe there is no way ANY EU airline employing its staff in Europe, paying its taxes in Europe and applying all other kind of regulations we do have in Europe will be able to compete in the long run with a well managed airline from the middle east or many parts of Asia. US airlines might be in a comparable situation to the European ones at the end of the day. Most other airlines around the world however have lower wage bills, lower operating costs at their home bases, pay less taxes, get more state support etc. They have to be cheaper and they can easily offer higher service levels because of this structural advantages.

EITHER
we accept this and we will see the European legacy carriers to be replaced by those ME and Asian airlines plus a few "European-looking" airlines (like Norwegian and others) which have their company home bases in tax havens and employ staff from abroad at "Asian or ME conditions"
OR
we regulate market access in Europe

Say this to our commisionners who implemented this mess at EU level.
Common sense dictate and plead for a REGULATED market access to the EU.. The damage is already huge .. I expect more pain to come if we do not completely overhaul our current paradigm and related policies.