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REUTERS/Axel Schmidt
Flying close to the radar.
SKY HIGH

Lufthansa’s monopoly on German skies has sent domestic flight prices soaring

By Jill Petzinger

There were squawks of protest from Lufthansa’s competitors in Europe in October, when the German flag carrier swept in to buy the bulk of its bankrupt rival Air Berlin. Ryanair chief executive Ryan O’Leary called on the EU competition authorities to block the Lufthansa takeover, calling it a “conspiracy” between the German government, Lufthansa, and Air Berlin that would drive up prices for customers.

But the deal went ahead, with Lufthansa buying around 80 of Air Berlin’s planes and effectively killing all domestic competition. Eurowings, the only other low-cost German carrier also belongs to Lufthansa.

The impact of the deal on consumers became apparent in November, when website Mydealz, using search engine Skyscanner, found that short-haul week-day ticket prices were up 26%—and up nearly 39% on weekends. On super-busy routes like Berlin-Frankfurt, business class tickets fares were up 60%.

After receiving numerous complaints, the Federal Cartel Office said on Friday (Nov. 24) that it was looking into Lufthansa’s pricing system and would decide whether or not to bring a case against the airline.

“The bankruptcy of Air Berlin has damaged competition and has led to a shortage in offers, particularly on domestic routes,” said Andreas Mundt, head of the cartel office.

“The few seats we can still offer are of course scarce and expensive,” Lufthansa CEO Carsten Spohr told the Bild (paywalled link in German). Ticket prices fluctuate on demand. If there is high demand, automatic booking systems offer the cheapest booking class less often—and if lots of seats are free, the system offers cheaper tickets to ensure planes fly at full capacity.

Lufthansa board member Harry Hohmeister defended the airline in an interview with Welt am Sonntag newspaper, saying  the accusations of price increases were not true. “These are individual cases that also happened in the past during Monday mornings or Friday afternoons”, said Hohmeister.“For 95% of passengers, the prices haven’t changed.”

The problem is that the majority of the Air Berlin planes bought by Lufthansa have been grounded since the end of October, and will stay there until EU competition authorities approve the Lufthansa takover. According to Der Spiegel, there are around 110,000 fewer seats available per week than there were in October. This month, Lufthansa put a 747 jumbo on the Berlin-Frankfurt route to try and handle the shortfall.

The situation may start to right itself early next year. Lufthansa has promised to offer more flights. Also, British low-cost airline easyJet is currently awaiting approval to buy 25 Air Berlin planes and is reportedly interesting in offering internal German flights.