SWOT analysis of Lufthansa
This article is about a detailed SWOT analysis of Lufthansa. It aims to analyse the strengths and the weaknesses of Lufthansa. It also aims to explore the opportunities and the threats facing the airline. Lufthansa is a German airline which operates from two main hubs: Frankfurt airport and Munich airport.
Strengths of Lufthansa
Lufthansa is one of the largest airlines in Europe. It is owned by The Lufthansa Group which has operations around the world with more than 550 subsidiaries and investment companies in its portfolio. Its largest business segment is passenger transportation where Lufthansa plays a significant role (Lufthansa, 2019).
Lufthansa is one of the founding members of Star Alliance which is the world’s largest airline alliance. As of June 2019, Lufthansa flies to 193 international destinations in 81 countries. It has codeshare agreement with a number of airlines e.g. Air Canada, Air China, Air India, Air New Zealand, Cathay Pacific, Etihad Airways, and Alaska Airlines.
Skytrax (a British rating agency) awarded 5 stars to Lufthansa in 2018 making it the first 5-star airline in Europe. The same rating agency has chosen Lufthansa as the ‘Best Airline in Europe’ in 2019 (Skytrax, 2019). Lufthansa has also been nominated as the ‘Airline of the Year’ in 2019 by the famous trade journal, Air Transport World (ATW).
Lufthansa offers passengers a number of excellent in-flight services. For instance, the latest blockbusters, music, games, Internet access on board, e-journals, pre-flight shopping, and an extensive selection of food and beverages entertain the passengers very well.
Weaknesses of Lufthansa
Lufthansa’s financial situation has not been that great in 2019. It suffered massive financial challenges and revealed a loss of €336m (£290m) for the first quarter of 2019 (Topham, 2019). Factors such as excess seat capacity across the industry and rising fuel costs have been blamed for the airline’s financial misery.
Lufthansa has been slow in resolving industrial disputes over the years. The airline’s relations with its pilots have been very challenging and have resulted in a number of industrial strikes, cancellations of many flights, and financial losses. However, it is worth mentioning that Lufthansa has reached an agreement recently with its main pilot union to resolve the industrial disputes.
Opportunities for Lufthansa
Exploring new destinations is a good opportunity for Lufthansa. In fact, the airline, in cooperation with Eurowings, is due to offer three non-stop flights a week from Frankfurt am Main to Bridgetown in Barbados, to Windhoek in Namibia and to Las Vegas in the United States of America by the end of October 2019 (Lufthansa, 2019).
Due to increases in consumer purchasing power in many countries, many people would like to travel aboard for holidays. In fact, Europe has a very good number of great tourist destinations which attract tourists from around the world and as a result offers business opportunities for an airline such as Lufthansa.
Threats to Lufthansa
Threat is the last element to address in the SWOT analysis of Lufthansa. There is no doubt that Lufthansa faces a number of fierce competitors in Europe and beyond. Its main competitors include but not limited to British Airways, Air France, Singapore Airlines, Air India, Qantas Airways, Etihad Airways, Emirates, Turkish Airlines, and Virgin Atlantic.
High labour costs, and rising fuel prices are also challenging Lufthansa and many other airlines constantly. Unsurprisingly, global political tensions and uncertainties have been blamed for being a major factor particularly for fuel price hikes. In fact, rising fuel costs have played a big role in Lufthansa’s financial misery in the first quarter of 2019.
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Last update: 30 June 2019
Lufthansa (2019) Lufthansa Group, available at: https://www.lufthansagroup.com/en/company.html (accessed 30 June 2019)
Skytrax (2019) Best Airlines 2019 by Region, available at: https://www.worldairlineawards.com/best-airlines-2019-by-region/ (accessed 28 June 2019)
Topham, G. (2019) Lufthansa suffers turbulence with €336m loss in first quarter, available at: https://www.theguardian.com/business/2019/apr/16/lufthansa-admits-financial-turbulence-with-336m-loss-in-first-quarter (accessed 25 June 2019)
Photo credit: Pixabay
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.