The FINANCIAL — While Pegasus, the low-cost Turkish airline company, is arriving in Georgia, Austrian Airlines declares that it is leaving the country. It is the case that low-cost companies are becoming a substitute for middle and high cost international companies. Pegasus, which starts its operations in the Georgian market from 10 October, will be offering one-way flights from 79 EUR.
“The year 2009, with the economic crisis, has brought a drop in passenger figures, including from Tbilisi. In 2010 Georgian passenger figures are growing again,” Stefan Schwarz, CEO of Lufthansa in Georgia, told The FINANCIAL.
Recently British Midland International and Austrian Airlines were integrated into Lufthansa Group. However after Austrian Airlines leaves the Georgian market Lufthansa does not plan to add other flights.
Austrian Airlines’ Tbilisi office was managed by Eva Berger, Honorary Consul of the Republic of Austria to Georgia.
“For every airline operating between Georgia and Europe it is a challenge to achieve and sustain profitability. It is not the most important factor how full the flights are – what’s essential is only if the revenue the airline earns exceeds the costs of operating its flights in the long term. This is particularly difficult for routes between Georgia and Europe, because of the long flight times and the high capital cost involved,” Stefan Schwarz said.
“Georgia is an important market for us in which we have actively invested in the past years. As in most countries worldwide, we offer a hub concept, meaning that our customers can benefit from modern and efficient airport hubs in Germany, Austria, the UK and Switzerland in order to continue their journey to anywhere in the world. We therefore do not have the intention to offer direct flights between third countries,” said Schwarz.
“Lufthansa serves nearly 80 countries from Germany. There are no plans to serve any flights out of our partners’ home countries,” Schwarz added.
“With the integration of BMI and Austrian Airlines in the Lufthansa Group, it was our aim to find as many synergies as possible and to have a lean and efficient organization. This is why in Georgia as well as in most of our offices worldwide we moved under one roof. That enabled us to team together on important issues and to serve our customers better,” Schwarz declared.
The case is that low-cost companies will become a substitution for middle and high cost international companies. Pegasus, which starts its operations in the Georgian market from 10 October, will be offering one-way flights from 79 EUR.
Tourists will have the opportunity to fly to Georgia from 65 EUR, while Georgians will have the opportunity to travel to Istanbul by paying just 79 EUR, and to the capitals of European countries from 119 EUR. The prices include VAT, insurance and safety payments.
“The airline industry is highly price competitive worldwide, and this is the same in the Georgian market. Lufthansa continuously monitors available competitor prices and always has a good deal on hand. At similar prices Lufthansa always offers better quality, quicker connectivity, shorter travel time, higher service level and/or other benefits appreciated by our customers. Feedback of airline customers confirm that happiness about excellent service lasts much longer than the joy of a cheap price,” declared Schwarz.
Prices at Lufthansa according to destination, class of service, and depend on demand. Lufthansa’s regular prices for return tickets to Europe start at 249 EUR. Promotional prices are temporarily available from 189 EUR – the more flexibility the fares allow, the higher the prices usually have to be.
The price of one way tickets in Turkey on Pegasus range from 79-99 EUR, while for European countries it is from 119 EUR – Rome and Berlin, Brussels and Zurich – 129 EUR, and London – from 139 EUR.
By investing 3.5 billion in 189 seat Boeing 737-800 type liner of 2010, Pegasus passengers will have the opportunity to travel to 18 cities of Turkey as well as 28 cities of Europe.
Passengers of Lufthansa can currently use daily flights with Lufthansa to Munich. The Lufthansa network worldwide offers flights to over 200 destinations worldwide. The Lufthansa Group currently provides 8 weekly flights from Tbilisi to our hubs in London Heathrow and Vienna.
According to Schwarz Georgians are especially keen to travel to countries such as Germany, France, Spain and Italy.
“We can see a trend of increasing sales via our website. We provide attractive offers online and have received various awards for our online booking engine. Travel agencies remain an important sales channel in Georgia as well as our own sales office in Tbilisi,” declared Schwarz.
Schwarz says that for a country with such a small territorial size like Georgia, with a population of only around 4.5 million people, a low private purchasing power per capita and no substantial export industry, the existing volume of air services is already largely developed.
“It would now be the right time to develop the quality of air traffic in Georgia, to improve the Tbilisi airport infrastructure, by extending the passenger terminal, by upgrading the runway, installation of air navigation systems to improve landing safety in bad weather conditions, introduction of a passenger convenient security checking process and sufficient aircraft handling equipment. This should have priority instead of trying to attract low end carriers to a market of limited size,” declared Schwarz.
Recently the meal on board airlines has been reduced. Moreover some companies are still not providing complementary catering services onboard.
“We are very pleased that have consistently been offering the usual high standard of onboard catering, while others have reduced or stopped offering catering completely. We see that it is appreciated by our customers to enjoy complimentary drinks and food and we will not change this as it is a part of our service,” declared Schwarz.
According to Schwarz the year 2009, with the economic crisis, has brought a drop in passenger figures from Tbilisi also. In 2010 Georgian passenger figures have been growing again. Following the demand Lufthansa has increased capacities between Georgia and Germany and has been offering more than 100,000 seats between the two countries in 2010.
As an international airline, Lufthansa has a global profit and loss statement and local sales offices. We do not have local financial statements. In the second quarter of 2010, the Lufthansa Group has posted an operating profit of 159 million EUR, more than tripling the figure for the second quarter in 2009.
“We are seeing a positive development of the market this year and for the future. This summer we were able to seasonally offer direct flights to our biggest hub, Frankfurt. We are very happy with the sales of this route and it demonstrates that there is more potential in the market. At the moment we have no concrete plans for further expansion. However, we are constantly monitoring the market and are evaluating our options,” declared Schwarz.
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