ABSTRACT
The entry of no-frills carriers into the airline industry has caused a marked increase in the intensity of competition. The no-frills airlines are meeting the consumer trend toward extremely low-priced offers through a new business model focused on lean processes. The established airlines must therefore also face this market segment without neglecting traditional customer groups. The hub-and-spoke airlines are coming under pressure of declining yields worldwide. This has already led some American airlines to file for Chapter 11 bankruptcy protection.
From Lufthansa’s perspective, this pressure should be countered not only through a significant reduction in unit costs but also with a fundamental strategic repositioning to respond to current customer demands. This challenge can be met only by introducing structural changes.
