weero

By that logic every airline management rocks. As they have after all much control over the information flow inside their company. It hence is a void statement.

And it also trivially is false: no one, not even your LH deities, has access to important data they would need to run the business optimally. The market's reaction, no matter how high the consultants' remuneration is not predictable with great accuracy.
That is very true however. They have the biggest captive audience on Earth and a legal system slanted in their favour to a degree that it hurts the country's reputation.

Add to this that next to all airlines fly profits these days and you have a sound reason why you cannot convey the grandeur of the LH management to laymen like me. As it strongly begs the question: would the results be any worse with a cautious know-nothing do-nothing management?
Narrower filters, not wider.

And are you serious here? Even I - once I turned 20, not any earlier - did finally understand why some people get upset when I praise the fantastic designs of the Panther and King Tiger tanks. Some people do not see the ground breaking recoil system of the Krupp 88mm AA gun - they see it as a killing machine.
And while I don't share their narrow focus, I now well understand it when they experiences losses.

weero

No it is not. Unlearning travel patterns, loosing upgrades, and burning all the miles is hard work and unpleasant. Akin to get "used to a new spouse". So it isn't astonishing in the least.

SMK77

As long as Lufthansa needs Flyertalk to learn about their own error fares and system bugs, they don't seem to have all the information they need...

And despite having hundred people working in revenue management, the level of sophistication is not there:

Only opening J and closing C and D is no rocket sciene but fraud.

Not handing out an F award where F8 and A8 because they 'might be able to sell the seats' three months out with no reservation can't be state of the art either.

SMK77

That's fully correct. LH benefited from economies of scale here: they need less fuel per passenger flown and besides that fuel got cheaper.

The problem with the bigger plane is: if I can't sell seats for the same price on average like before then I am not realizing any upside on the yield side and LH earned less per RPK sold in 2013 than in 2014. A clear (unwanted) consequence from using larger planes and only being to able to sell the additional capacity for lower prices.

weero

That is nothing! According to The Onion News Network the late Kim Jong Il had approval ratings in excess of 120%.

weero

That just reminds me - my last pair of evouchers just expired - they were applied for months to a very lightly loaded segment but at no avail.

This will be my first LH longhaul coach segment in ages as the UA GPUs always cleared with great reliability. The only consolation is that there will be no screaming babies on that flight - the last few times I flew it, LH op-upped all of them to C with great reliability. F&F beating evouchers...

But hey "they" have "the data"....

SMK77

We need to have lunch soon again. You could have flown SQ C with your eVouchers... Expiring is no solution!

N1003U

Yes, the rigor and objectivity (and motives) of Skytrax ratings have been long ago discussed in various fora here. I think most folks here understand that like most organized information outlets, the main objective of Skytrax is to promote their own business, not provide meaningful information (unless providing meaningful information happens by chance to support their main objective).

At the expense of flexibility.

Excellent point.
I suspect this is a big part of why LH told Airbus they can keep the those last few A380 options, and the 747-8 was practically dead-on-arival as a passenger aircraft. Yet despite the production/design problems (Boeing) and late start (Airbus), the 787 and A350 are selling like crazy.

Two 250-seat machines with similar range and costs per passenger are a heck of a lot more flexible than one 500-seat machine. The downside is that you need more landing slots, which is a problem in some places.

If EK actually takes delivery of all of the A380s they have on order, I sort of wonder how they are going to keep them all busy.

oliver2002

Don't underestimate EK with their A380s, they are making very smart use of them. The unit cost is pretty low on those and thanks to buying nearly half the A380s built the capex is relatively low. Their strategy seems to be to kill the competition by flooding certain markets with nice price capacity, then tweak yield when they have a good market share. When India allows A380s to land sometime this year they will take over that market like they have BKK & co.

Low fuel cost may help show nice figures right now, but note that it also allows some competing carriers in Europe to survive. SAS was nearly dead last spring, AB and LO must also monitor the fuel price daily.

SMK77

It's not only more flexible but the smaller plane should also result in higher result per revenue passenger kilometer: You have to sell less P or K L T fares to fill your bird...

FD1971

First of all, you need to double-check your numbers.

Secondly, it is almost funny, but very fitting that you are surprised that deregulated markets result in higher capacity sold at lower prices. Well, that was the original idea behind deregulating markets in the first place.

I understand you did not follow courses in economics, so it might indeed be surprising for you, but has been pretty normal in other industries as well, again that was also the idea behind the democratization of aviation. @:-)

So what do you do, when you expect prices to fall?

You try to decrease your costs and enjoy a healthy difference between your costs and revenues. You also work on points of differentiation, e.g. providing the most important thing in aviation and more or less the only that companies really value, you offer as many nonstop (aka time-saving) flights as possible.

LH is doing both, hence their success.

FD1971

Wrong.

The cost per plane is more or less the same, if it is equipped with 120 or 130seats.

Due to Score, overhead costs are lower, so the 120 seat plane in 2012 should have been more expensive to operate than in 2014, all other costs, like fuel, excluded.

Lower costs and more seats give you the possibility to offer lower fares (if you want to) but if you do not want to, you still benefit more lower costs.

So the cost per seat mile is lower than before, which means that the revenue per seat mile could also be lower to still reach the same profit.

Franz expects LH to declare a profit of more than 1 billion in 2014 and even more in 2015, so I suggest we should leave the yield management to experts.

gojko88

Firstly, lower prices as a result of deregulation are far from being a given. Suffice to have a look at the UK market (hardly underdeveloped and uncompetitive, is it?) and the prices of energy, services, train tickets etc.

Secondly, where did you even get deregulation out of? The OP was talking about larger planes with excess capacity, not rules and regulations. In fact, it's regulation rather than deregulation that's keeping LH afloat in the German intercontinental market.

FD1971

The planes are mostly the same, they just have more seats, which is the main reason for all those complains from previous years.

Lufthansa is very smart in this regard. The market for pis*ing off some Airrailers is regulated after all, so only one prank per year.

In recent years, LH decided to focus on:

NEK in 2011/-12
More expensive awards in 2012-13
M&M changes in 2013-14

FD1971

You might confuse two things here.