Deutsche Lufthansa AG Case Analysis

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The Deutsche Lufthansa AG is now the largest aviation company both in Germany and in Europe. Its name derives from Luft (which is the German word for air) and Hansa (a latin word meaning guild). It traces back its history to 1926. Although its services were paused during the Second World War, in 1953 in an effort to create a national airline for West Germany, a company called Aktiengesellschaft für Luftverkehrsbedarf (Luftag) was formed in Cologne. With over 620 aircrafts, 118,000 employees and numerous subsidiaries as Swiss International, Austrian Airlines, Germanwing and Lufthansa Technik achieved a total operating revenue of EUR 30 billion for 2013. It is also one of the founding members of Star Alliance, created in 1997. It operates through five business segments. Passenger Airline Group, Logistics, Maintenance Repair Overhaul (MRO), Catering and Information Technology Services.

Porter’s 5 forces
Competition from rival sellers
The competition in the aviation industry is extremely high, due to many reasons. First of all, the fixed costs are extremely high in the industry, which leads to difficulty in leaving the industry because of long-term loan agreements. Also, due to the complexity of the products involved or the planes it is difficult to differentiate. Some of the rivals for example Easy jet or Ryanair may
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There are low switching costs between firms, because customers always look for the best flight possible. They need to know all the flight details regarding timing and safety. There is some brand loyalty and each company has a niche. Lufthansa’s main target audience is frequent international business class travelers. They need certain amenities (i.e. dense route network, comfortable lounges, etc.) and quality service. Most of them have a membership card and earn points. Lately Lufthansa launched a new campaign “Nonstop you” and try to target also leisure

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