There was no strategy, it was about survival

According to the wishes of the company’s management, the Lufthansa subsidiary should keep low-cost rival Ryanair in check on short-haul routes. In the eyes of CEO Carsten Spohr, sending Eurowings into the race was one of the most important decisions. But the offshoot caused losses year after year.

In 2018 and 2019, which were actually good years for aviation, the situation came to a head: losses rose to over 200 million euros at times. According to an insider, Spohr is said to have said that there was only one member of the internal management circle who could fix the debacle: Jens Bischof, at the time head of the Lufthansa subsidiary Sun-Express.

Strategy department was closed

Bischof started at Eurowings in March 2020 and was able to immediately bury his hundred-day program because of the pandemic. After just a few weeks in office, the manager had to ground almost all aircraft. An airline that is doing badly, plus the pandemic and in the middle of a change in management – ​​a dangerous situation.

“You don’t really know your teammates in the new company yet. “You don’t know who you can rely on yet,” remembers Bischof. You haven’t put together your own team yet.

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“I have combined the topics of purchasing and the efficiency program in one function. An unorthodox approach perhaps, but there was no other strategy than survival,” said Bischof. Without further ado, he even closed the strategy department.

When it became clear that the corona consequences were slowly becoming manageable, a strategy was needed again. “The question naturally arose as to where Eurowings would be in the market and where we would make money tomorrow,” says Bischof. Four findings brought about the turnaround:

Insight 1: Eurowings is not Ryanair

“We can’t do it cheaper than Ryanair, and we’ve never been in the low-cost segment. But we can do it better than Ryanair,” says Bischof. The Eurowings boss sat on the board of directors at Jet Blue, a US low-cost airline with upscale offerings, for five years. He took the orientation as an “inexpensive airline” with him, not low-cost, but not a premium company either – in the middle.

Unlike Ryanair, Eurowings customers can purchase a free middle seat, rebook up to 40 minutes before departure, or there is a premium tariff with faster check-in and catering. Passengers can also take part in Lufthansa’s Miles & More frequent flyer program.

Finding 2: The customer base has changed

Before the pandemic, 60 percent of Eurowings customers were business travelers. Today private travelers make up this proportion. This has consequences for the route network. Anyone who travels privately usually flies on vacation. So Bischof increased the offer of medium-haul tourist destinations and at the same time reduced the domestic offer.

Thanks to the new aircraft – an A321 neo has a longer range than a classic A321 – the aviation manager’s team has even more options here. The kerosene is also enough for the connection from Berlin or Stuttgart to Dubai. “More medium-distance routes will be added in winter,” says Bischof.

Insight 3: Less is more

He likes to talk about resizing. The company’s own fleet should only be as large as it can be economically utilized in the winter. In the summer, when there are more flights, Eurowings rents additional equipment and crews. This is called wet leasing.

In summer, capacity is increased by around 20 percent. The concept is not new, Tuifly also uses it. In Bischof’s eyes, it is efficient and creates flexibility. “It gives us room to breathe – upwards, but also downwards.”

Insight 4: It’s not just about flights

As many customers go on vacation, Eurowings wants to get even more out of it. That’s why Bischof started Eurowings Holidays. On the website, customers can combine flights from Eurowings, but also from Condor, with a hotel. “It’s a platform, not just another sales channel,” says Bischof.

Artificial intelligence should give this additional impetus, the computer will become a personal travel advisor. Many in tourism have started such projects, including Tui. Bischof works with Karlheinz Kögel and his company HLX, the inventor of the last-minute trip.

“Customers should no longer go to the Eurowings website and book the flight there, but book the hotel on Booking,” explains Kögel, explaining the strategy. This is not directed against travel agencies or tour operators. The digital advisor was actually supposed to go live in August, but now it should happen this month.

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“Bishop always has the customer in mind. “It’s good for business, but sometimes stressful for the workforce,” says Eurowings employees. The boss investigates every customer complaint and can sometimes be quite annoying.

But the result could be the long-awaited win this year. The fact that it is not particularly difficult to make money with the current high ticket prices – the Eurowings boss does not want to leave this critical point alone. The cost of fuel alone has risen massively, along with higher fees for airports and air traffic control.

The manager is not worried that falling prices will soon destroy the company’s success. So far it has not been possible to see that ticket demand is weakening. And if so? “Then we are prepared for it and can react flexibly,” promises Bischof.

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