Lufthansa - AirBerlin - Where has all the rage gone?

A few months back the hype was all Lufthansa becoming the German aviation monopolist in light of airberlin's tragic demise. Sure enough, the one third aviation part of my heart was bleeding, too!

In case you wonder? I should say that I follow the aviation industry for both personal (travel) but also to some extent with professional interest. I typically have some ticket price agents running all the time. With lesser importance here, but complementing my interest, I follow the global executive aviation industry. The routes I check are some of the inner German routes originating in Stuttgart, Stuttgart to Mallorca as well as London's airport choices in Europe and some high traffic international routes, such as Stuttgart (via FRA, MUC and ZRH) to Los Angeles, San Francisco, Denver, New York, Tokyo and Singapore.

After airberlin's bankruptcy inner German and typical routes that airberlin had served into Europe saw significant price inflation after it's ceased operation. - For some time only, though. Now the surprise: Ticket prices on many relevant routes have started falling to formerly unknown levels. See for yourself before I continue to try to gain some insight:

I just picked three routes: STR-PMI, DUS-PMI and STR-TXL for illustrative reasons. DUS-PMI to rule out any Stuttgart-only effect. To show some level of methodic rigour I also used the exact same mid-week 14-day trip window for each of them with a lead time of some 2.5 months from now for booking. And I chose the second half of August which is still high summer season, clearly not a low price period of the year! My former best ever price to Mallorca (direct flight from Stuttgart) in July/August was 179 Euro. Berlin typically ran in the 100-200 Euro range, but easily higher, too, depending on time of day, weekday and lead time for booking.

Whatever I chose now, I ended up with extremely reasonably priced tickets as long as there was sufficient lead time. And I have plenty of choice in airline (Easyjet, Laudamotion, Eurowings, yeah, and infamous Ryanair, too) and time of day (not only 6am) ...

... what has happened: Two serious new competitors (Laudamotion, Easyjet) have entered the market. And boy, Easyjet sure is easy ... I have just concluded my third Berlin roundtrip with them, all at 50-100 Euro prices. Booking is a few clicks or sweeps, service is plain vanilla (which competitor's isn't?) but they are totally reliable and punctual. Laudamotion is RyanAir-backed on top and RyanAir itself expanding in Germany.

At the same time, Lufthansa has developed the Eurowings product to a point where the more efficient processes and cost position start to have impact on overall Lufthansa economies - while Lufthansa has become the top value generator in the DAX30 (at serious >economic< value metrics applied!) all at the same time. Hence, Eurowings now has the muscle to be an active (!) price competitor on all these routes, too. The industry is expanding again after years of misery in Germany and crews are an imminent bottleneck - typically a sign of growth.

How does that play with the past? Yes, Lufthansa and airberlin were supposed to be bitter rivals. But note: airberlin was in continous trouble and even though perceived as "cheap" had a sustainable cost problem forever. Thus, the long term strategic low cost boundary was - with some certainty - never reached by both airberlin and Lufthansa. But in light of the fact that on most "important" inner German and European routes it was always the two, Lufthansa and airberlin, competing, market pricing was to some extent lower bound stuck with the airberlin (marginal) cost position.

Hmmh, are you asking yourself this: Sounds much more we had a German market oligopoly in the past, rather than a looming monopoly problem as foreseen just a few months ago.

(Real) competition still does wonders for consumers - ... and businesses!