Of course it makes them uncompetitive. All airlines in Europe figured out that not requiring masks boosts business and so did Lufthansa - a) they don't require crews on LH metal to enforce masks, b) they've dropped the mask requirement on their other airlines such as OS or LX wherever possible. Now, I'm not optimistic enough to hope that this would bring a collapse of LH Group (which would really boost the competition in Europe) but I'm quite sure the management isn't happy about this situation.