German airline Condor has complained to the European Court of Justice about Lufthansa’s upcoming cancelation of its cooperation agreement. This is planned to happen in June 2021, but Condor claims it is not in line with the conditions of Lufthansa’s state aid.
Canceling feeder flights
The main cooperation between the airlines involves passengers using Lufthansa feeder flights to connect to Condor flights. There is also participation in Lufthansa’s frequent flyer program Miles & More. Such collaboration has been in place for many years and is an important way for Condor to market and fill flights.
Lufthansa announced in mid-2020 that the route cooperation would end in June 2021. The cancelation is part of Lufthansa’s strategy to prioritize its own capacity. It has also canceled wet lease agreements with several partner airlines.
A Lufthansa spokesman explained this reasoning (as reported by FlightGlobal):
“As a result of the worst crisis in worldwide aviation, we are forced to significantly reduce our fleet, and unfortunately, we need to cut thousands of jobs. It would be irresponsible to neglect capacity utilization of our own aircraft and therefore endanger additional jobs at Lufthansa.”
Escalating the complaint
Condor filed a complaint with Germany’s competition authority (Bundeskartellamt) in January 2021. It claimed that Lufthansa abused its dominant market position in the region in canceling the agreement.
It has now taken the complaint to the European Court of Justice (ECJ). This was confirmed in reporting from Reuters on February 12th.
No findings or conclusions have been released by either authority yet. In a statement, the President of the Bundeskartellamt explained that an investigation was necessary to ensure competition in a highly concentrated flight market and that they were trying to establish the facts of the case.
Condor is not alone in appealing parts of Lufthansa’s bailout. Ryanair has also complained to the European Union about the amount of aid Lufthansa has received.
Lufthansa’s state aid package
Condor’s complaint to the ECJ is based on the state aid that Lufthansa received. Lufthansa received a €9 billion (US$10.9 billion) government bailout in June 2020. This came with several conditions, including that the airline should preserve competition. This included transferring some take-off and landing slots at German airports to its competitors.
Condor Chief Executive Officer Ralf Teckentrup explained the airline’s view on this when filing its initial complaint in January. He said:
“Taxpayers’ money should be used to help companies survive against the backdrop of the pandemic, but not to push other companies out of the market.”
Where does this leave Condor?
Canceling the agreement with Lufthansa would be a further blow to Condor. It has already suffered following the collapse of Thomas Cook (with a 49% stake in Condor) and the cancelation of a takeover deal from PGL. Setting up a new arrangement for feeder traffic, at a time when all airlines are struggling with the slowdown in aviation, would be a challenge.
Simple Flying looked in April last year at the possibility of nationalizing Condor to help its survival (possible as a temporary solution). The situation has changed since then, and Condor has received government financial assistance. But this time, it needs regulatory assistance if it is going to resolve this situation.
Would you like to share any thoughts on Condor’s problems or Lufthansa’s decision to end cooperation? Let us know in the comments.
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