For a long time now Lufthansa and Etihad have been the fiercest of competitors, with Lufthansa even proclaiming that the Etihad business model threatened its actual existence.
Over the last couple of weeks, the situation has turned around 180 degrees, and the once fierce competitors are now partners, so why and how did this dramatic shift happen so quickly?
Etihad Airways and Lufthansa Build New Partnership
The Lufthansa Perspective
Why Lufthansa changed its mind is relatively straightforward; firstly, its biggest competitor in Germany is Air Berlin.
One of the major stakeholders in Air Berlin is Etihad, which owns a 29% share of the ailing German airline.
As part of the new deal, Lufthansa will take over 38 aircraft from Air Berlin, which the company plans to use on its low-cost carrier Eurowings.
While this may seem strange that Lufthansa bails out its biggest competitor in this way, the situation is quite logical. By taking the aircraft from Air Berlin, they permanently weaken their biggest domestic competitor.
Secondly, by strengthening their low-cost arm, Lufthansa can go a long way towards keeping EasyJet and Ryanair out of the lucrative German market.
The Etihad Perspective
The whole saga is a tactical masterstroke by Etihad. Firstly, they get rid of their troublesome investment in Air Berlin.
Secondly, as part of the deal Etihad and Lufthansa are going to be code-sharing flights. Etihad will codeshare on Lufthansa’s flights to Brazil and Colombia, while Lufthansa will codeshare with Etihad on flights to the UAE.
This move will secure Etihad’s position on routes to the UAE, and will now silence Lufthansa’s criticism of Etihad. Since they are partners, the German company can no longer speak out against its partner.
It is amazing how quickly the airlines have become friendly considering the historical level of enmity between the two of them.
Even though the deal was in every one’s best interest, it takes something special to turn over a new leaf so quickly.
With this alliance, it is clear that Lufthansa has secured its domestic base, while Etihad the real winners in this situation, will get rid of an enormous financial liability and build a new partnership with its biggest critic.
Image: Courtesy Etihad Airways
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