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Lufthansa airlines
Overview
• is the flag carrier and largest German airline
which, when combined with its subsidiaries,
is also the largest airline Europe in terms of
passengers carried.[The name of the
company is derived from the German
word Luft meaning "air" and Hansa for
the Hanseatic League. Lufthansa is one of
the five founding members of Star Alliance,
the world's largest airline alliance, formed
in 1997
• Headquarters in Frankfurt and Koln,
Germany
 • Vision
To be the MRO and Air transport of first
choices in the world
Vision and Mission
Mission Become a leading name in the world of
air travel by being the top preference of
customers and shareholders all over the
world
 Michael Porter 5 Forces
Threat of New Entrants
The bargaining Power of Buyers • Government regulations and licensing from the federal
• Business or regular travelers have little bargaining power Aviation Association.
with airlines. • Brand loyalty and identification of major airlines.
• One traveller does hurt the airline. • Contracts between airlines and airport are hard to develop.
• Only a few airlines to choose from and even less at an • Substantial costs associated with forming as airline-
individual airport. airplane purchases, labour costs, fuel costs, maintenance.

Rivalry among Established Companies

• Most competitors, competing directly, emphasize a low-
cost strategy.
• Many Consumer look only to cost as a determining factors
in a purchase creating an intense environment.
• Switching costs are generally low, even though companies
have tried to increase switching costs with the use of
”frequent flyer” programs.

Substitute Products Bargaining Power of Supplier

• All supplier have tremendous bargaining power with the
• No other product competes directly with airlines in terms of
airline industry.
cost and speed of travel.
• There are few fuel providers and no reliable alternatives to
• Charter planes are much more expensive than commercial
fuel.
airlines.
• Pilots are in high demand
• Train service is generally much more expensive and time
• Airports are in limited supply
consuming.
 Threat of
substitute
• Railways
Services
• Bus Services
• Shipping
Services

New entrants
Customer bargain
Competitor • Virgin Australia
• Air Travellers
Singapore Airlines • Low cost
• Travel Agencies
Air France international
• Business
British Airways Airlines
Travellers

Supplier
• Boeing
• Fuel
Companies
• IT Companies
Value Chain
IFAS Weight Rating Score
Strength
Global Operations 0.22 4 0.88

Largest Star Alliances 0.17 3 0.51

Member
Presence across 0.07 4 0.28
integrated segments
IT Division 0.04 3 0.12

The European union has 0.22 4 0.88

made across borders
easier with regulation

Weaknesses
Development of low cost 0.2 2 0.4
airline structure
Labour Dispute 0.16 2 0.32

Declining cash from 0.14 2 0.28

operations
Total 1 - 2.79
EFAS Weight Rating Score
Opportunities
Different Customer 0.27 4 1.08
Segments
Intense Competition and 0.15 4 0.6
price Discounting
GDP is growing 0.12 4 0.48

Threats
Other alliance 0.16 2 0.32

Low cost provider 0.13 3 0.39

Alternatives travel option 0.12 4 0.48

for short distance
Total 1 - 3.45
Conclusion
• The Strategy that should be take by Lufthansa is:
1. Acquistition and Restructuring Strategies
2. International Strategies
3. Cooperative Strategies
• The recommendation to Lufthansa is maintain its current approach
and continue to search for new ways to control cost, from alliances,
and maintain simplified customer service.