Lufthansa has condemned LOT Polish Airlines’ proposed acquisition of Condor, stating that it represents “dubious, competition-distorting” state interference by Poland.
In a combative charge that takes a page out of Delta’s longstanding playbook against Qatar Airways, Lufthansa labeled LOT Polish as an unviable carrier. LOT, says Lufthansa, “no longer has a sustainable business model” and “has been kept flying by governments.”
“Poland has helped its state airline back on its feet several times.”
Lufthansa was quick to add that it is not against all state intervention. On the contrary, Lufthansa says “one-off crisis intervention” represents helpful and even necessary state aid. But while Lufthansa sees “substantial reasons for politicians to come to the rescue of companies in certain situations”, it warns: “It becomes problematic when state interventions become the rule.”
Such a hedge is necessary considering that Condor was kept alive after the collapse of Thomas Cook thanks to a €380 million bridge loan from the German government. But LOT, according to Lufthansa, is on “permanent survival assistance” and this government spending “not only distorts competition, but also harms the climate”.
Lufthansa has also used the environmental argument to oppose budget carriers in Germany, stating cheap fares also distort competition and harm the climate.
In fairness, Lufthansa has also used the same argument against Alitalia, even as it considers its own investment in the beleaguered Italian carrier. The end goal is the same: Lufthansa says state-aid “prevents the consolidation of the industry that is so necessary in Europe”.
Distorted Competition Or Real Competition?
Lufthansa’s argument is not wholly without merit. It is true that on an otherwise-level playing field, state aid can disrupt markets and create imbalances. Yet, Poland’s investment in a stable, longstanding German airline to complement its network in Poland (and now Hungary) goes beyond just throwing money at something and hoping it will stick. It’s a plan to grow, not a plan to lose money. And German consumers will benefit by having a strong Condor that will compete against Lufthansa rather rather a weak stand-alone carrier or even an appendage to Lufthansa.
Lufthansa believes “state money is being used to fuel the price war in the skies and low-cost flights are being indirectly supported”. Of course that is a weak argument considering how pivotal Germany’s government-run, government-supported infrastructure (rails, highways, ports) directly and indirectly supports Lufthansa. But Lufthansa will not just roll over as a once docile competitor now threatens to become a stronger competitive force.
image: Anna Zvereva / Wikimedia Commons