Lufthansa suffered a painful defeat in the dispute over the feeder flights for Condor. In a preliminary investigation, the Bundeskartellamt determined that the holiday airline had a “antitrust right” to these connections. The authority is also critical of further restrictions on competition in the existing agreements.
The two airlines have been cooperating on feeder flights for decades: Lufthansa transports Condor passengers on its own aircraft from other airports in Germany and Europe to Frankfurt, where they then switch to Condor long-haul routes. The practice goes back to the time when Condor was still part of the group and was continued later. But then Lufthansa decided to enter the long-haul tourist business from Frankfurt itself, currently primarily with the new subsidiary Eurowings Discover, but also increasingly with the core brand.
Consequently, Lufthansa terminated the so-called Special Prorate Agreement (SPA) with Condor on June 1, 2021. The holiday airline lodged a complaint with the Federal Cartel Office because it saw an abuse of a dominant position in the market. The cartel office initiated proceedings, and Lufthansa then extended the SPA until May 10, 2022, also to forestall a temporary injunction with similar content.
The head of the cartel office, Andreas Mundt, has now come to clear conclusions. The Lufthansa Group is dominant on the feeder routes. “No other airline can offer flights to the major German hubs in Frankfurt, Munich and Düsseldorf beyond single flights,” says Mundt. “We have concerns about the admissibility of terminating the Condor cooperation if Lufthansa thereby unreasonably hinders its competitor in the downstream markets for long-haul flights.”
“We have concerns about the admissibility of terminating the Condor cooperation if Lufthansa thereby unreasonably hinders its competitor in the downstream markets for long-haul flights,” says Andreas Mundt, head of the Cartel Office.
(Photo: Roberto Pfeil/dpa)
Lufthansa had argued in the past that nobody was preventing Condor from taking up its own feeder flights. However, the cartel office considers this argument to be inadmissible: “According to the investigations carried out so far, there would be no suitable slots available at the central hubs such as Frankfurt for setting up a corresponding network,” according to the competition authority. On average, passengers who booked a long-haul flight lived at least 300 kilometers away from the departure airport of the intercontinental trip. Train and long-distance bus are therefore not an alternative.
The decision is extremely important for Condor, because it can hardly operate the long-haul routes economically if there are no transfer passengers. The airline has just delivered 16 new Airbus long-haul jets A330-900 invested, which will be delivered between October 2022 and January 2024 and the old Boeing 767– Fleet to replace. Condor was in existential difficulties due to the bankruptcy of its former owner Thomas Cook in 2019 and the corona pandemic. However, she then successfully went through a protective shield procedure and was taken over by the financial investor Attestor last year.
The Lufthansa offshoot Eurowings Discover has been flying since July 2021
“We are pleased that the Federal Cartel Office has followed our assessment and sees the termination of the commercial agreement between Lufthansa and Condor as an abuse of market power,” says Condor boss Ralf Teckentrup. Lufthansa only confirmed that it had the authority’s draft decision. You will “take a comprehensive position” towards the office, but will not comment publicly at the moment.
The competition authority is not only opposed to the Lufthansa plans to no longer provide Condor with feeders, the current conditions also do not allow “non-discriminatory access to capacity”. Booking classes would be reduced and Condor’s “pricing options” would be restricted. All of this is also inadmissible.
A final decision is pending after the cartel office has examined further statements from Lufthansa and Condor. But if the assessment stays the same, it will at least make it considerably more difficult to set up the competing Eurowings Discover. The Lufthansa offshoot has been flying since July 2021 and currently operates nine long-haul jets A330 and three machines for short and medium-haul routes. In the upcoming summer timetable, the airline is to include many new destinations that will also be served by Condor. Among them are Anchorage, Fort Myers and Las Vegas. The fleet is expected to grow to 21 machines by the summer. Lufthansa was also interested in buying the Condor in 2019, but had not come to an agreement with Thomas Cook on the price.