The future of Brussels Airlines with Lufthansa

[HighInTheSky]

-And welcome back Champagne !
-middle seat blocked in C on European flights
-Star Alliance Company Plus Program
-Competitive pricing on long haul flights
-Senator/*Alliance Gold status really recognised by staff - including ground staff at BRU airport
-Premium check in desk
-Possibility to have Miles&Mores/*alliance rewards with American Express
-City Bank Mastercard ?
-lounges with decent food (the little red candy might be back !)
-two different lounges (like in STR and ZRH with real catering)
-First Class on flights to Africa with full flat beds

If we will implement all of this i'm not sure, but i do hope and think that a real C class will be back on the European flights.

But i think the First Class is a bridge too far...Most airlines (apart from SQ, EK, and the rest in that 'league') are cancelling their F class and upgrading their C class.
And,the A330's are already on their weight limit, so how will they install those extra (heavy!) seats for F class?

I can be wrong though. I hope actually, it would be nice!

[Ducatibiker]

*Lufthansa, Swiss and United offer F/C/Y - if you take Economy Plus on United, I am encline to think that passengers have the choice between not 2 classes of service but 4. United is currently changing C into flat beds and F into suites.

*Swiss flies A330 to MCT with three classes - full reclining beds in F

For me the question will be pricing. Will the Lufthansa Brussels Sales Office be able to offer competitive prices in F an C, comparable to those if ticketed in different markets

[sn26567]

Miles & More instead of Privilege might not ne a blessing. You need 30,000 miles from Miles & More for a roundtrip, versus only 20,000 for Privilege. Acceptedly, Miles & More offers a larger choice (sometimes I could not book my preferred SN flights on Privilmege, whereas Miles & More offered me several alternatives at the times I wanted to fly).

[Ducatibiker]

You are quite correct - I also had a look at the redemption chart and was not too impressed when I compared it to United and to Brussels Airlines. Looks like you accumulate miles on LH (depending the booking class code)faster but have to check ratios nb. of flight to award. I am just happy to see that we will have awards in F on * Alliance and better recognition as elite members.

* Alliance Gold = ? (in the future):
-access to security fast lane
-access to Brussels Airlines lounge
-like BMI, free food on board regardless of the booking class
-priority for technical upgrades
-dedicated check in counter, pre-boarding (like Swiss)

and maybe the hold Circle from Qualiflyer will be invited to become HON members...

[tolipanebas]

I am pretty sure F class is not on the agenda at SN, but the return of C class on European shorthaul definitely is.

It's a must really, being a future STAR alliance member and a soon-to-be LH code share partner on many Belgo-German and other European routes. I just can't see how on earth Brussels Airlines could successfully code share with LH if they do not offer a C class on board once more...

LH will definitely NOT be contented with SN dropping their C class pax in b.flex; they will want their Belgian affiliate to offer a full business class service. After all: you can't expect a top paying C or F class pax going to HKG through MUC or FRA on LH to be charmed by a sandwich from the carton mealbox full of publicity on the SN connecting flight.

What remains to be seen is how the European economy class is going to be re-positioned. I don't think SN can remain with 2 different types of on board service in economy due to the complexity of such a product (3 classes on an RJ seems a bit too much really), so I wonder what will go: the retail service of b.light, or the complimentary service of b.flex... If Swiss is anything to go by, its the first one.

Either way, LH is about to throw away 2 years of conceptual work at the office (mainly by VEX people) and frankly I don't mind a second, because the whole concept of SN of wanting to be some sort of a hybrid carrier (pseude low cost, pseudo full service) just never came accross as something convincingly innovative nor did it look sustainable for the long run.

With SN being part of the LH group of airlines ("as a PREMIUM BRAND next to Lufthanssa and SWISS, not on the regional level like Air Dolomiti or LH Regional" according to LH's CEO Mayrhuber), any future medium haul low cost operations from the LH group at BRU can always be covered by Germanwings... It would make far more sense see LH use Germanwings rather than SN's b.light to fight Easyjet if and when they ever dare to settle in BRU.

Nope, I don't think we will see many changes to the product on long haul, but on the medium haul front, I'd put my money on a return to the past... and rightfully so.

Will be fun to read the press release on the 'improved services and comfort' and match it with the release of the 'first airline of a new generation' of only a few years ago... It will hopefully soon show to have been a very shortlived new generation!

[euroflyer]

Looks like Brussels Airlines will have to double the fares to comply with these demands...

My long experience with LH and *Alliance says: You are right

We may prepare for drastic increase in ticket prices between Germany and Belgium, Switzerland and Belgium and probably Austria and Scandinavia and Belgium as well. Flights from FRA or MUC to Scandinavia are among the most expensive once you can have in Europe, as their is more or less a *Alliance monopoly on those routes for full-service flights offering two booking classes and many different flight times troughout a day. It will be for the best of LH, SN, the employees, etcetera because surprisingly their are enough people who are prepared to pay those prices, but for us as pax, very very sad

But than again I will be able to merge my Privilege and M&M accounts which might open up new possibilities. So far I could never really do much with my SN miles (because of the family with small kids we do not do long-haul holidays at the moment and you cannot fly so often on European level to use all those miles, I already just booked 4 flights with miles for November and still I have far above 100'000 miles). With M&M you can use your miles to buy cameras, hotel stays, bikes, lamps and all cool kind of stuff, much better programme!

[tolipanebas]

Looks like Brussels Airlines will have to double the fares to comply with these demands...

My long experience with LH and *Alliance says: You are right

We may prepare for drastic increase in ticket prices between Germany and Belgium, Switzerland and Belgium and probably Austria and Scandinavia and Belgium as well.

Flights from FRA or MUC to Scandinavia are among the most expensive once you can have in Europe, as their is more or less a *Alliance monopoly on those routes for full-service flights offering two booking classes and many different flight times troughout a day.

It will be for the best of LH, SN, the employees, etcetera because surprisingly their are enough people who are prepared to pay those prices, but for us as pax, very very sad

I know I will get flamed for this, but let's face it, it is not normal to be flying medium haul in Europe for only 100 euro (all in) one way. Substract the airport taxes and you're actually paying less for your transcontinental European flight, than for a train ride to the Belgian coast!

Airlines like Ryanair have made us believe prices below 100 euro are sustainable (for them it might be, given the HUGE indirect subsidies and revenues from other anciliary sales), many start-ups have also tried it with much less success and in an effort to compete with the outburst of LCCs in Europe, legacy carriers have had no choice but to follow suit, but the reality is that at these prices nobody is able to book a profit. Sure, the consumer is smiling all the way, but the industry is going bankrupt... Look at the state the industry is in the USA... Is it really this what the European consumer wants? 10 years of cheap flying and then everybody bust?

LH is indeed one of the few airlines in Europe able to book good anual results and yes, it is mainly thanks to the fact that they have the size, the network and the alliance to basically set higher fares than other airlines can on similar routes...

Flexibility, frequency and comfort on a vast network always comes with a price.

Now, I don't think prices on medium haul flights will double, but they will certainly be corrected upwards significantly. SN and LH have said as much when they said they want to make the European network of SN profitable thanks to the advantages *alliance will bring. As always, the profitability will be achieved by working on 3 fronts: a higher loadfactor (thank's to the alliance), lower costs (thanks to the size of the combined request for pricing of SN/LH/LX) and obviously also from a fare increase. It's a given short haul routes to HAM, MUC, BER, FRA and any future German route, as well as OSL, WAW, BMA/ARN, GOT, VIE and CPH are going to be turned into real cash cows for SN, just like GVA or ZRH are already today.

BTW- It's another reason why I assume a real C class will reappear and the b.light concept will be scrapped... the future ticket prices will mandate a higher level of on board service and comfort.

[jan_olieslagers]

Far be it from me to flame you for these thoughts, xxxxxxPilot - you confirmed much of my own opinions/ideas/reasonings. Only I'm far from an expert on air travel so I tried hard to keep my big mouth shut...

If VLM were still on their own wings, even they might benefit: on their own they could hardly battle with EasyJet for Geneva traffic, but with LH bashing Easy out of the Belgium-Switzerland market altogether, an ANR-GVA route might again have a chance. Only dreaming, of course...

[134flyer]

It has been very interesting to follow this topic these days. First of all I think it is very good news that SN will be bought by LH and hopefully some positive changes will be made:

-First class on SN longhaul? If I understand correctly, the Africa flights are high-yield, so maybe there is a market to install a (small) First class cabin. However, it might be better to opt for an upgraded Business class cabin (with completely lie-flat seats) when/if new longhaul aircraft arrive to replace or supplement the existing A330s.

-Like others have said, get rid of b.flex & b.light and replace it with 'proper' intra-Euro C & Y class (like LH, LX & OS). If LH indeed wants to maintain & expand the Africa network of SN at BRU, then b.flex & b.light is unacceptible on the feeder flights.

-Regarding the Africa network: if LH wants to maintain & expand this network and even if BRU won't be a 'real' Star Alliance (mini)hub, BRU will probably at least become a Star Alliance 'Focus City' with some interesting transfer traffic. In this light, BRU airport might want to speed up the (longterm) plans to add the non-Schengen/Schengen Pier A-West (with 18 gates) to the existing Pier A. This extension could house all non-Schengen flights of Star carriers BD, TK, MS, US, UA, CO (after they have joined Star) and of course SN, including their (expanded) Africa flights, supplemented with some Star Alliance Schengen flights. The first gates of the existing Pier A could exclusively be used for Schengen flights of Star carriers. All this would also be in line with Star Alliance's 'Move Under One Roof' concept. Although not a short term solution, it will also free-up space at Pier B, so Jet Airways can (in the mid-term) continue to expand there. Of course all will be dependent of the current economic crisis and it's (potential) impact on aviation, but I think this extension should have priority over the building of a LCC terminal.

[euroflyer]

I know I will get flamed for this, but let's face it, it is not normal to be flying medium haul in Europe for only 100 euro (all in) one way.

Sit back and relax, I will not flame you for it You are absolutely right, well, unfortunately It cannot be sustainable the air fare is much much much lower than a rail ticket or even the price of the fuel my car needs on the route. If you see all the people working at the airport, for the airline, the infrastructure and technique that is needed etcetera etcetera

It just would be better from a pax point of view to always have at least two big carriers competing with each other on main routes so not to let prices go totally into absurd levels. Already today with LH you have to pay on most days and flights above 700€ for a fully flexible economy return ticket FRA-BRU-FRA, despite the (however small) competition from the two daily SN flights and the railway (you can get a single ticket for a non-stop ICE train from as little as 29€ , and that is really available without any problem and the train needs something like 3h45).

But it looks like we all have to face the choice in the future between rather low-cost (Ryanair), flying from secondary airports (if not worse), charging for every little s**t you can imagine extra or to pay again the ticket prices of the old times - with some special fares available here and there - and get therefore a decent service. Anything inbetween does not seem to work probably in the market.

Well, for the people flying for business (like myself) it will not make much of a difference, but the leisure flyer might not be prepared to pay those prices anymore for a one-day shopping trip to Milan etcetera ... But so is life, times are changing

[Vinnie-Winnie]

I know I will get flamed for this, but let's face it, it is not normal to be flying medium haul in Europe for only 100 euro (all in) one way. Substract the airport taxes and you're actually paying less for your transcontinental European flight, than for a train ride to the Belgian coast!

Let me flame you

If you apply differential prices according to people's/companies willingness to pay well u can cover the whole segment of the market. Charging €100 minimum for a flight will just cut off such a proportion of your customers that you lose out more than you win and that is the bottom line. That's why airlines will never introduce such fares unless the OD pair is able to charge that much! BRU-FRA can support this fare and much more actually, But BRU-FRA-ATH can barely! At the end of the day the marginal cost of flying an extra passenger is close to 0, and as such you need to manage your demand efficiently. And that includes rock bottom fares if need so! I personally don't expect Yields of Brussels Airlines to rise massively, as for some reason it appears that LH is keen on making BRU a hub, divert passengers from FRA, MUC, ZHR, and make people transfer through BRU! So load factors up certainly, Yields remaining pretty much the same, but revenue and profit up due to increased load factors.

So for BRU-FRA or BRU-ZHR, you can easily charge whatever you want! NCL-BRU-FRA or NCL-BRU-ZHR, i'd barely expect something more than €100-300, that's €50-150 per flight!

Sit back and relax, I will not flame you for it You are absolutely right, well, unfortunately It cannot be sustainable the air fare is much much much lower than a rail ticket or even the price of the fuel my car needs on the route. If you see all the people working at the airport, for the airline, the infrastructure and technique that is needed etcetera etcetera

Look at Eurostar fares, not your internal subsidised fares inside Belgium! You'll see that for as little as €75, you can go to London and back! And that is paying for HSL infrastructure in 3 countries, a tunnel that cost billions to build, 24 traincrews on board, staff at departure... Look at this way very expensive as well! Point is for rail as for air infrastructure, everything is there, fixed costs are massive, variable cost fairly low! Buy a ticket the day before, and you are forking minimum €2-300! It's not that different!

Let me be flamed

[NCB]

Whether or not fares will increase is debatable.
If SN is able to install a decent business class product, fares may not increase by much on the European network until SN starts getting more longhaul:

Business Class will bring high yields and sustainable money.
Until SN's shorthaul fleet is packed with
at least 70% transfer pax (from STAR and their own longhaul operations) / 30% point to point from BRU, SN will still need the point to point shorthaul economy passengers and hence, compete against Easyjet, Ryanair, all other airlines offering point to point and hence, need to offer competitive rates.

Of course, once SN's shorthaul fleet can be sustained with feeding only (STAR + own longhaul fleet), economy point to point fares will start to go up significantly.

I do not see this happening until SN has at least 10 longhaul aircraft and starts benefiting from the alliance.

[airazurxtror]

I hope that the SN fares will become very high, à la Lufthansa; as a consequence, more LCC will be drawn to BRU, and perhaps easyJet develop a base here, which would be quite interesting.
Anyway, an LCC terminal is definitely needed asap !

[Air Key West]

I fully agree with everything you've written, tolipanebas. Very good analysis and presentation of the situation.
As for those who fear high price increases because of LH taking over b.air, I have made a random check and compared fares :
LH FRA OSL on 06 OCT and back on 08 OCT, SN BRU OSL BRU same dates : both airlines offer fares starting at around 430 euros.
BRU FRA BRU same dates : LH around 425 euros, SN around 350 euros.
I have personally found LH/LX to usually have very competitive fares ( good quality/price ratio) both in Y and C and certainly on long haul flights (although LH tends to be very expensive in C in Europe but you get what you pay for).
But I have never expected to fly for free, for 0,02 euros or even 49,99. Just like I don't expect to get a free or a 50 cents liter of gas at the petrol station.
All in all, LH taking over b.air will bring advantages and disadvantages for pax and b.air employees, but my guess is there will be more advantages than disadvantages.

[Ducatibiker]

I give you one advantage for passenger:

I flew yesterday BRU-LHR and used the Brussels Airlines lounge around 1 PM. The only food available was....little portion of cheese and salami. Today, flying back I used the new *Alliance lounge in Terminal 1 of LHR. There was hot chili, plenty of different warm food, sandwiches, plenty of staff...what a world of difference.

Now that we know that Brussels Airlines will join * Alliance, the question is WHEN and could it be as soon as possible ?

[itami]

Now that we know that Brussels Airlines will join * Alliance, the question is WHEN and could it be as soon as possible ?

Let's say one can expect them to join * Alliance by the end of 2009 at earliest. Preparing for an alliance membership means a lot of work !

[Air Key West]

I fully agree with you, Ducatibiker, however the "lounge problem" may be a BRU problem because the lounge LH uses in Brussels doesn't have any proper catering either, just like the b.air lounge. Let's hope Star Alliance have their own lounge(s) soon in BRU, too.
My main concern right now is that LH was not allowed to buy 100 % of b.air right away and that the value of the 55% to be bought in two years from now will depend on b.air's value by then. So, this could mean that LH will not do anything substantial to improve b.air's performance in the immediate future because if the value of the airline increases dramatically in the next two years, LH will have to pay more. So, they might just be watching that b.air breaks even so that the price is low for them in 2010 when they will sweep out the airline and give it a real make over. LH and we, pax, may just have to be patient for another two years because Stevie D. wants to hold on to his baby for as long as possible.
So, the present management team will probaly have their jobs for another two years, but if I were them, I would already be looking for another job, because they will probably be thanked by LH in 2010. Patience.....

[BrightCedars]

I don't think LH will wait until it can exercise its option for the remaining 55% to improve things at SN.

Let's face it, even at 250M€, they are not paying a high price, if you consider that there are already reserves in the amount of 300M€.

Also, they will face intense negotiations and perhaps dirty tricks for trying to get SN at a bargain below the 250M€ mark. If they turn around the company already and make more € out of it, it won't be much to pay 250M€ for it anyway, only the current shareholders may be a bit upset at they could potentially have booked a better profit but we should all remember that the entire operation was based on a 200M€ startup amount that all these honorable shareholders were more or less ready to sacrifice for the cause of (re)connecting Brussels.

[BrightCedars]

With SN in Star Alliance, I do believe that fares will rise, although there will remain some leisure oriented travel, be it just to allow people to spend their miles out.

With this rise in fares, the low-cost operators will have access to a small proportion of passengers that were currently flying SN's cheapest fares and that will reinforce their position at BRU, hence the need for the low-cost terminal. On the other hand, SN will be able to fill its planes better at better yields and will not have to be as concerned of the low-cost competition as it is now. This all points to an improvement in the level of service for the better. Real C class in Europe and decent Y class too.

I do not expect SN to introduce first on long-haul at all. Maybe the Business class will be improved into a business first kind of product if it isn't already the case. I do truly hope that PTV in Y on long-haul will be a priority though. The example set by LH isn't too reassuring as they were a very late adopter of the perk, but they eventually came to it.

[tolipanebas]

My main concern right now is that LH was not allowed to buy 100 % of b.air right away and that the value of the 55% to be bought in two years from now will depend on b.air's value by then. So, this could mean that LH will not do anything substantial to improve b.air's performance in the immediate future because if the value of the airline increases dramatically in the next two years, LH will have to pay more. So, they might just be watching that b.air breaks even so that the price is low for them in 2010 when they will sweep out the airline and give it a real make over.

Mind you, when SWISS was taken over by Lufthansa -a process which was done in several steps as well-, the German airline paid the average share price over the last 3 weeks to the private stockholders of the Swiss airline, whereas they only paid a symbolic euro to the Swiss public shareholders. The contract however included a provision that they were to be given a significant bonus IF Lufthansa would exceed its expected financial performances in the 2 years following the merger. LH did exceed its expected performance (and by a very great margin even) and as a consequence LH paid the Swiss cantons tens of millions extra.

Going by your fear, Lufthansa ought to have waited to expand Swiss till next year too then, yet they didn't; they preferred not to waste more than 2 years and just maximize on their investment right away.

I think we'd better start to be getting some confindence in Lufthansa, because the exemple they have set with SWISS clearly shows that a take-over by them doesn't mean they try to draw all traffic towards their own flights, nor do they play dirty tricks to snatch the airline at an artificially derated price.

Lufthansa negotiates hard no doubt, but they seem to be willing to pay a fair price for an airline which they think can bring them something extra and they understand that it is in their own long term interest to keep the airline autonomous and expand it so it can retain and maximize on that something extra, rather than to just absorb it and see it loose that something extra, because as we all know: a multi-brand concept always gives you more customers than a single brand concept (cfr. the many different brands of laundry powders, all from "Procter and Gamble" as well.)