Perhaps the biggest threat: Lufthansa's protectionist instincts
Lufthansa CEO Carsten Spohr recently called for the renegotiation of bilateral air service agreements with the UAE and Qatar to protect against an “oligarchy” of carriers in the Gulf (Reuters, 17-Mar-2015). This was a further example of Lufthansa's instinct to call for protectionist barriers to defend against competitors with disruptive new business models.
Setting aside arguments concerning the validity of claims that the Gulf-based airlines are government subsidised and that they provide unfair competition, this instinct is a threat to Lufthansa because it implies that its mindset is not yet completely right.
It must devote all its energies to taking action to fight competition by restructuring its own operations and by developing relevant strategic partnerships. It is attempting to do these things more than at any time in the past, but must go further and fully overcome the damaging instinct to complain about unfair competition.
The simple fact is that, even if the Gulf carriers could be stopped or at least slowed down, there will always be a new competitor with a better way of doing things. In future it will come from China, maybe from somewhere else in Asia, or perhaps from a low cost European competitor. But it will come and Lufthansa should focus on self-improvement and not on seeking increased protectionism.
Perhaps the biggest threat: Lufthansa's protectionist instinctsLufthansa CEO Carsten Spohr recently called for the renegotiation of bilateral air service agreements with the UAE and Qatar to protect against an “oligarchy” of carriers in the Gulf (Reuters, 17-Mar-2015). This was a further example of Lufthansa's instinct to call for protectionist barriers to defend against competitors with disruptive new business models.Setting aside arguments concerning the validity of claims that the Gulf-based airlines are government subsidised and that they provide unfair competition, this instinct is a threat to Lufthansa because it implies that its mindset is not yet completely right.It must devote all its energies to taking action to fight competition by restructuring its own operations and by developing relevant strategic partnerships. It is attempting to do these things more than at any time in the past, but must go further and fully overcome the damaging instinct to complain about unfair competition.The simple fact is that, even if the Gulf carriers could be stopped or at least slowed down, there will always be a new competitor with a better way of doing things. In future it will come from China, maybe from somewhere else in Asia, or perhaps from a low cost European competitor. But it will come and Lufthansa should focus on self-improvement and not on seeking increased protectionism.
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