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Business

Flying to a Roman Holiday for Only €29

For months, Lufthansa has angrily watched as cheap carriers Easy Jet and Ryanair wreak havoc on Germany's lucrative passenger market. Now, the German flagship has made a sideways entry into the "no frills" market.

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Going smiling into a rough and touble market

After months spent seething while low-fair carriers like Ryanair and Easy Jet undercut their relatively high fares, Lufthansa is making a sideways entry into the low-fare market at the end of October.

The German flagship airline is a partner in the new Cologne-based no-frills airline German Wings, which takes off for the first time on October 27. After trying unsuccessfully to legally stop no-frills competitors like Ryanair from offering lower prices, Lufthansa has made the foray through its partnership with German Wings parent company, regional airline Eurowings Luftverkehrs AG.

Under the motto “Fly high. pay low,” German Wings will offer Spartan flying accommodations – “no schnickschnack” as they put it on their web site – in exchange for fares to between 10 and 12 European cities that begin at 29 euro.

The news has spread fast. This week, German Wings announced it had already sold more than 100,000 tickets to destinations such as Rome, Paris and London.

“We have the goal, through price and quality, of becoming the no-frills leader across Europe,” said Joachim Klein, German Wings’ general manager in a statement.

The company is backing up such ambition with concrete goals. Within a few years, they want to add eight destinations, fly 1.5 million passengers and add at least four more jets to their six-plane fleet.

Ryan Air

Ryanair jet

Whether they can stick around long enough with established low-fare carriers Easy Jet, which recently made a play for Deutsche BA, and Ryanair breathing down their necks remains to be seen. The two companies have made the most of the rapidly growing cheap airline market, both boasting double digit percentage growth almost every month since the Sept. 11 attacks.

Sending a message in a competitive market

Though claiming only 5 percent of the German airline market currently, analysts say no frill airlines’ business will only grow, claiming a market share of up to 20 percent in some European countries in the coming years. The airlines have already wreaked havoc in the inland German market for Lufthansa and Deutsche British Airways, which had to completely restructure its operations earlier this year following erosion of customers to the upstart Germania.

When Lufthansa tried keeping up with low-cost carriers, it was punished by Germany’s anti-trust office. The office ruled the airline giant was dumping when it lowered its prices in the spring to remain competitive. Lufthansa was furious, responding with billboards advertising the fares and a note in brackets below notifying readers that the anti-trust office wouldn’t let them price any lower.

Now, Lufthansa finally has some sort of presence in the market, even if its only a small share.

“I think it’s sending a message to the market entries that Lufthansa, as a major player out of Germany, will not offer them any competition market share and passengers,” Uwe Weinrich, an airline analyst a Hypovereinsbank told DW-WORLD.

Flughafen Köln Bonn - Konrad Adenauer, Köln Porz

Flughafen Köln Bonn - Konrad Adenauer, Köln Porz

The strategy has had some success already. Virgin Express, Virgin Airlines’ lower fare carrier, announced this week it was delaying plans to open up shop at the Cologne/Bonn Airport (photo) in light of the increasing competition. Still, others are continuing with their expansion plans undeterred. The travel agency giant TUI plans to begin flying out of Cologne/Bonn, in partnership with Germania, under the name Hapag-Lloyd Express in December. The airline has advertised flights on some inter-European connections as cheap as 10 euro.

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