Monday, 16 June 2014

Lufthansa Profits to be Less Than Expected, Gulf Airlines Make Merry

Airlines is a tight business. Tight- because there is not much of market development in the short run and there might be a number of airlines targeting much the same customers. So, most often, one’s profit is another’s loss. This is precisely what is happening with the US and European airlines on one hand and the Gulf carriers on the other. The rapid pace at which these airlines have consumed up the markets of India Subcontinent and South East Asia on one hand and Europe on the other has meant that traditionally strong full-service carriers such as Lufthansa are feeling the pinch.

The emergence of Gulf Airlines such as Emirates, Etihad and Qatar and development of robust infrastructure has meant that the airports in these regions have become hubs of many airlines at the cost of Paris, Frankfurt and London which had been the traditional hubs. Not surprisingly, Lufthansa has seen its shares take the dip.

It is not only the European airlines but also the US airlines which have been feeling the heat now. This is particularly in the wake of this fact that these gulf carriers are increasing their destinations in US with direct, non-stop long haul flights.  

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