The parent group of LOT Polish Airlines, Polska Grupa Lotnicza, has ruffled some feathers at Lufthansa. The German giant is now taking aim at Condor’s takeover and deeming the Polish government as providing “permanent survival assistance” to LOT.
Lufthansa unpleased with Condor takeover
FlightGlobal reports that more than a few feathers have been ruffled at Lufthansa over Condor’s acquisition. Lufthansa characterized this deal as one that “distorts competition.” At the same time, Lufthansa also characterized its Star Alliance partner as having an unsustainable business model relying on government support.
But, that was not all from Germany’s largest carrier. The airline also claims that the Polish government’s assistance to LOT is “permanent survival assistance” that “not only distorts competition, but also harms the climate.” It should be noted that the Condor acquisition is being financed through the Polish government.
Is this “permanent survival assistance”?
While every airline would love to post record profits each year, this does not happen. In the past, LOT Polish Airlines has received additional funds from the government to cover the airline in hard times. However, LOT’s state aid is nowhere near that of Alitalia’s or Air India’s – both of which seem to be limbering on without an end in sight.
However, like Alitalia and Air India, LOT Polish Airlines is Poland’s flag carrier. And, governments have a vested in protecting their own airlines which can help preserve key air links (even if those links are unprofitable) or else serve as symbols of national pride. This is precisely why both Air India and Alitalia are still flying despite facing significant financial headwinds.
LOT appears to be doing better; it crossed the 10 million passengers in a year threshold in 2019. In addition, it appears that the Polish flag carrier is also poised for major growth. However, just because an airline grows significantly does not mean that it becomes profitable, so eyes will be on LOT as the airline does expand.
What about Condor?
Condor is a German leisure airline. While the carrier did receive a loan from the German government after Thomas Cook collapsed, Condor is still flying and found a buyer – unlike both Alitalia and Air India. While LOT would service more economic-hubs like Beijing and Washington D.C., Condor would continue to serve as a leisure airline connecting passengers to vacation destinations.
Whether or not this is “permanent survival assistance” remains to be seen. Condor will have to be profitable in its own right or else serve a major role in LOT’s network – both of which are possibilities. However, this will largely depend on how LOT’s parent company manages Condor. Just because a larger entity takes a stake in an airline does not mean that airline will remain successful.
Why would Lufthansa be upset?
Germany’s aviation market is dominated by Lufthansa. The carrier operates more seats from Germany to Europe and the rest of the world than any other airline in Germany. Condor, however, persists as a leisure airline on Lufthansa’s home turf. And, one of Lufthansa’s partners is even now supporting the continued survival of that airline. The more competition there is in a market, the lower the fares tend to be.
Intra-alliance feuds do occur. Many will remember American and Qatar’s bad blood (that somehow recently was rectified). Lufthansa and LOT, being in the same alliance, do work together. However, now it appears that Condor’s acquisition by LOT’s parent company is ruffling some feathers at Lufthansa. How this plays out, however, is yet to be seen.
Do you think Lufthansa is right about LOT’s Condor takeover? Let us know in the comments!