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The Airline Industry of Germany

Presented by

Elizabeth Chi
Jia Liu
To be discussed...

Market overview

Porter's five forces analysis

Major airports and airlines

The trend for the future?
German Airline Industry
Volume vs. Value
German Airlines Market Segmentation
Volume vs. Value
Market Forecasts
Volume vs. Value
Porter’s Five Forces Analysis
Leading Companies
Lufthansa Air Berlin PLC & Germanwings Ryanair Holdings
Co. Luftverkehrs GmbH plc

Hub/base of Airlines

Strategic location

The importance of slots

Frankfurt am Main International Airport

Passenger traffic -- No.1 in Germany; No.3 in Europe; No.8 worldwide

Cargo traffic -- the busiest airport in Europe

A hub of Lufthansa, usually with over capacity operations

Munich International Airport

The second busiest airport in Germany and the 28th busiest in the world

It was named the "Best Airport in Europe" and the 4th best worldwide

A hub for Lufthansa and Star Alliance airlines, main base for dba and

Düsseldorf International Airport

The third largest airport in Germany

Serves as the main hub for the airline LTU and as an important
secondary hub for Lufthansa

Hamburg Airport

Germany's oldest airport in operation

The 4th biggest German airport

Berlin Tegel International Airport

Has the most scheduled flights among 3 Berlin Int'l airports

The main base for Air Berlin and LTU

Together with Tempelhof International Airport, the 2nd oldest commercial
airport in the world, would be replaced by Berlin-Brandenburg
Operating services to 209 destinations in 81 countries. Together with its partners
Lufthansa services over 410 destinations.

German Flag carrier Key Metrics

Luft means air, hansa was named after Hanseatic League, in € million
the powerful medieval trading group Revenue (+13%)

Founded in 1926, Berlin and headquartered at Cologne 22,420 in 2007

400 subsidiaries worldwide 19,849 in 2006

Core activity: Passenger transportation Net Profit (+106%)
1,655 in 2007

Total passengers carried in 2007: 62,894,000
803 in 2006
--No.1 in Europe and No.5 worldwide
Cash flow (+36%)

Primary operating regions: Europe, North America, Asia
2,862 in 2007

Co-founded and joined in Star Alliance in 1997
2,105 in 2006

Acquired Swiss Airline in 2005
Total assets (14.7%)

Partnered with Jetblue with a 19% share purchase in 2006 22,320 in 2007

Considering purchasing Polish flag carrier LOT and bidding 19,461 in 2006
for troubled Spanish flag carrier Iberia Employees (+7.7%)
100,779 in 2007
93,541 in 2006
Business Segments Overview

· Serving 841 destinations in 157 countries with a fleet of 411 aircraft

Passenger · Operated by Lufthansa AG parent group, Air Dolomiti, Lufthansa Cityline
Transportation and the Eurowings group including Germanwings
· A founding member of Star Alliance, a multi-lateral airline grouping
· Focusing on tapping passenger traffic in growing markets

Logistics · Operated by Lufthansa Cargo and undertakes freight transport

· The largest portion of freight is hbandled at Lufthansa cargo center, Frankfurt

· Provided by Lufthansa Technik, a world-leading provider of MRO services

· Covering 6 product divisions: Maintenance, Overhaul, Engines,
Components, VIP & Executive jet solutions

· Provided by Lufthansa Systems, customizing IT solutions for computer

IT Services center operations and offering IT infrastructure services to other industries

· Provided by LSG Sky Chefs, supplying 270 international airlines with

in-flight service from 190 catering facilities and having 30% market share
Company Profile Key Metrics
in € million
Revenue (+61%)

Founded in 1978 and based in Berlin 2,536 in 2007

Second Largest airline in Germany 1,575 in 2006
Net Profit

The biggest low-fare carrier in Germany and the third largest in
21 in 2007
Europe 40 in 2006

The fourth largest airline group in Europe in terms of traffic Cash Flow (+48%)

Slots at 20 German airports 469 in 2007

A fleet of 124 aircrafts (+6%) 316 in 2006
Total assets (+59%)

28.2 million passengers (+10.4%)
2,519 in 2007

135 destinations (+5.5%) 1,588 in 2006
Employees (+104%)
8,360 in 2007
4,108 in 2006
Acquisition Based Growth
A Hybrid Business Model
Business model: The only European airline in the segment between traditional full-fair
airlines and the low-cost carriers with competitive price/performance ratio

Positioning: Low cost carrier with full service on board and a wide range of extras

Strategy: Entry into long-haul business—closing the gap between conventional low
cost carriers and traditional high-priced airlines

Goal: Going global after being a leading player in European aviation

Action Samples:

topbonus - worldwide frequent flyer program-—unparalleled in the LCC sector (more
than 1 million signed up)

“Relax class” and “premium business class”

Formed partnership in China with Hainan Airline (fly to 80 airports)

Planned to merge with Thomas Cook subsidiary Condor
Other Major Players

A privately held airline engaged in passenger transport

A subsidiary of regional carrier Eurowings, which in turn
is controlled by Lufthansa

With hubs in Cologne and Stuttgart and bases in Berlin
and Hamburg.


The largest low-cost carrier in Europe

A scheduled passenger airline serving short haul, point
to point routes between Ireland, UK and continental

27 European bases, a fleet of over 163 aircrafts, over
50 million passengers in 2007

Seats are sold on one-way basis
The Trend for the Future?

Full price Low price

Good service Traditional Low-cost
Carriers Carriers Limited Service

Carriers Carriers Low price, full service

Thank you and have fun flying Lufthansa!

Any Questions?