Air Berlin enters high-growth route to take on Lufthansa and friends

The route between Stuttgart and Vienna looks to be really competitive with four airlines competing for market share on this 550 kilometre flight. However, Lufthansa and Austrian Airlines co-operate closely and are both members of the Star Alliance. Germanwings, who started services in September 2003, have operated double-daily since summer 2004 and are nowadays controlled by Lufthansa.

In 2002 before Germanwings started operating the route was flown by 135,000 passengers. In 2006 this had more than doubled to 290,000. In 2004, the first full year of Germanwings’ operation traffic grew by over 50%. The arrival of Air Berlin on the route in May this year provides the first truly independent competition to Lufthansa and its companions. Air Berlin also operates double-daily on weekdays while Lufthansa and Austrian each operate three times per day.

Since this is predominantly a business route undertook fares analysis for day return fares (including all taxes and charges) on working days for the next two weeks. Fare data was collected both for German and Austrian originating passengers.

Chart: Stuttgart to Vienna day return fares
Source: Airline websites on Sunday 19th August
Green shaded period is Saturday/Sunday

The market segmentation between Lufthansa/Austrian and Air Berlin/Germanwings is very clear from this data. For flights booked less than a week in advance Lufthansa and Austrian charge between €800 and €900 for a day return trip. This starts to reduce once you book more than a week in advance. For the LCCs fares are between €100 and €200 with both carriers offering very similar fares at all times.

Chart: Vienna to Stuttgart day return fares
Source: Airline websites on Sunday 19th August
Green shaded period is Saturday/Sunday

For Austrian originating passengers fares are, on average, slightly less than for German originating passengers across all four airlines. Lufthansa’s fares fall slightly sooner as the fare discrepancy between the legacy carriers and the LCCs diminishes more quickly.

Note: Fares were determined for direct flights only on the earliest available departure and the latest possible return, maximising the available working day.


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