The aviation industry has changed in the recent years rapidly. Twenty to thirty years ago the aviation was too expensive for the most people and a network of international air connections often did not exist. Nowadays the aviation belongs almost to an everyday business, whether professionally or privately.
At the end of the 70s there was an air traffic revolution, the concept of the low cost carrier (LCC) started. The LCC is a provider of the basic products, such as low service on board, seat comfort and free baggage drop off. 1 The first LCC was the southwest airlines from the USA. Up to the 90s Southwest offered LCC connection in US; without competitors in this business area. In 1990 the Irish airline Ryanair was founded and was the first LCC in the European (EU) area.
The airlines are facing new challenges: more clientele, more fair flight prices in comparison to the competition and in addition high margins. For a long time such scheduled airlines like LH Group, KLM- Air France and British Airways-Iberia were the representative airlines in the EU. People have spent a lot of money for having a full service on Board (luggage, food, etc.) and were often dissatisfied about constantly rising prices for the flight tickets. With the origin of LCC, the market has changed enormously. Yearly scheduled airlines announce customer decline and decreasing profits. What is the reason for that? Are the LCC responsible for it? Do the scheduled airlines have to rethink their strategies to be still competitive in the market?
Table of Contents
- 1. Introduction
- 1.1 Problem Definition
- 1.2 Objectives of the Work
- 1.3 Structure of the Work
- 2. Theoretical Part of Strategic Management Tools
- 2.1 PEST Analysis
- 2.2 Porter's Five Forces
- 3. Introduction of Lufthansa and Eurowings
- 3.1 Analysis of Strategic Decisions by Lufthansa
- 3.2 Feasibility of Eurowings with PEST Analysis
- 3.3 Feasibility of Eurowings with Porter's Five Forces
- 4. Conclusion and Recommendations
Objectives and Key Themes
This work aims to analyze Lufthansa's strategic decision to launch Eurowings, a low-cost carrier (LCC). It examines the feasibility of this new airline within the competitive landscape of the European Union, considering the existing presence of other LCCs. The analysis will utilize established strategic management tools such as PEST analysis and Porter's Five Forces framework.
- Lufthansa's strategic response to the rise of LCCs
- Feasibility analysis of Eurowings using PEST and Porter's Five Forces
- Competitive dynamics within the European LCC market
- The role of Cologne Bonn Airport in Eurowings' strategy
- The potential impact of Eurowings on Lufthansa's profitability
Chapter Summaries
1. Introduction: This introductory chapter sets the stage for the analysis by outlining the rapid changes within the aviation industry. It highlights the shift from expensive, full-service airlines to the emergence of low-cost carriers (LCCs) like Southwest and Ryanair. The chapter establishes the core problem: Lufthansa's profit instability amidst increasing competition from LCCs, and its strategic response—the creation of Eurowings. The decision to launch Eurowings is presented as a complex strategic move aiming to regain market share and enhance profitability, but also carrying significant risks given the already crowded LCC market. The chapter concludes by introducing the central research question: to understand Lufthansa's rationale behind Eurowings' creation, its viability, and its choice of Cologne Bonn Airport as its primary base.
2. Theoretical Part of Strategic Management Tools: This chapter lays the groundwork for the subsequent analysis by introducing two crucial strategic management tools: PEST analysis and Porter's Five Forces. It provides a theoretical overview of each tool, explaining their components and how they are used to assess the competitive environment and overall feasibility of a business strategy. The depth of this theoretical framework sets the stage for a robust and insightful analysis of Lufthansa's strategic move in the following chapters. The practical application of these models will be central to evaluating Eurowings' potential success.
3. Introduction of Lufthansa and Eurowings: This chapter delves into a detailed analysis of Lufthansa's strategic decisions, focusing specifically on the launch of Eurowings. It applies the PEST and Porter's Five Forces models introduced in the previous chapter to assess the feasibility of Eurowings. The chapter examines the competitive landscape, considering other LCCs already operating in Europe. Through the use of these frameworks, the chapter aims to evaluate the strengths and weaknesses of Eurowings, identifying potential threats and opportunities within the market, and ultimately assessing whether the initiative is likely to succeed or fail. It directly addresses the core research question of the study by providing a comprehensive and evidence-based evaluation of the strategic decision.
Keywords
Lufthansa, Eurowings, low-cost carrier (LCC), strategic management, PEST analysis, Porter's Five Forces, airline competition, European aviation market, profitability, market share, Cologne Bonn Airport.
Frequently Asked Questions: Analysis of Lufthansa's Eurowings Strategy
What is the main topic of this document?
This document analyzes Lufthansa's strategic decision to launch Eurowings, a low-cost carrier (LCC), within the competitive European Union aviation market. It assesses the feasibility of this strategy using PEST analysis and Porter's Five Forces framework.
What are the key objectives of this analysis?
The analysis aims to understand Lufthansa's rationale for creating Eurowings, evaluate the viability of this new airline, and determine the impact of its choice of Cologne Bonn Airport as its primary base. It also explores Lufthansa's strategic response to the rise of LCCs and the competitive dynamics within the European LCC market.
What strategic management tools are used in this analysis?
The analysis utilizes PEST analysis and Porter's Five Forces framework to assess the competitive environment and the overall feasibility of Eurowings.
What aspects of Lufthansa and Eurowings are examined?
The document examines Lufthansa's strategic decisions leading to the launch of Eurowings, including the competitive landscape, potential threats and opportunities, and the potential impact on Lufthansa's profitability and market share.
How does the analysis assess the feasibility of Eurowings?
The feasibility of Eurowings is assessed by applying PEST analysis and Porter's Five Forces to evaluate its strengths, weaknesses, opportunities, and threats within the European LCC market.
What is the role of Cologne Bonn Airport in this analysis?
The analysis considers the role of Cologne Bonn Airport as Eurowings' primary base and its strategic implications.
What are the key chapters and their contents?
The document includes an introduction outlining the problem and objectives; a theoretical section explaining PEST analysis and Porter's Five Forces; a section analyzing Lufthansa's strategic decisions and Eurowings' feasibility; and a concluding section with recommendations.
What are the key themes explored in this analysis?
Key themes include Lufthansa's strategic response to the rise of LCCs, the feasibility analysis of Eurowings, competitive dynamics in the European LCC market, the role of Cologne Bonn Airport, and the potential impact of Eurowings on Lufthansa's profitability.
What are the key words associated with this analysis?
Key words include Lufthansa, Eurowings, low-cost carrier (LCC), strategic management, PEST analysis, Porter's Five Forces, airline competition, European aviation market, profitability, market share, and Cologne Bonn Airport.
What is the intended audience of this document?
This document is intended for academic use, focusing on the analysis of themes in a structured and professional manner.
- Quote paper
- Maxim Lachmann (Author), 2015, Strategic Analysis of Lufthansa's Introduction of Eurowings, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/313106
