Lufthansa
Structure and Governance.
Performance and Competition.
Five-force analysis.
Lufthansa is one of the oldest and most successful commercial airlines in the world, and is the fourth-largest in terms of passengers. However, the company has not always been so successful, and in fact was teetering on the brink of bankruptcy just a short while ago. By examining Lufthansa's history, structure, governance, and contemporary strategies and goals, one is able to see how the company has weathered the ups and downs of political and economic history while increasing its market share to become a dominant force in the air transport market. Furthermore, by applying a SWOT and TOWS analysis to the company, one is able to effectively determine the best course going forward so that the company may retain its historical dominance while preparing itself for the unprecedented technological and social growth expected over the next decade.
History
The German airline Lufthansa offers an ideal case study of what it takes to succeed in the international transport business, and not only because the airline has been in business, in one form or another, for almost a hundred years. The company has managed to survive a world war, the partitioning of Germany, reunification, and advent of the euro, all while steadily growing its market share to become the fourth-largest airline in the world, carrying over fifty-six million passengers each year.
By examining each area of Lufthansa's business, from its history to its current management, alongside more detailed analyses of its role within the airline sector as a whole, one is able to see how Lufthansa has managed to succeed even when success was far from a guarantee. Although there have been ups and downs in Lufthansa's history, including some recent, well-publicized blunders, over the long-term the company has demonstrated an ability to react and respond to new challenges.
The name Lufthansa did not appear until after the second world war, when Germany required a new "flag carrier" airline in the wake of its defeat; all of its previous transport operations had been shut down as part of that defeat. However, the company can actually trace its history back a few decades, to the beginnings of commercial flight, when Deutsche Luft-Reederei became the first German airline to use planes instead of zeppelins, and introduced the same crane logo that adorns Lufthansa's planes to this day.
Thus, while the organization named Lufthansa did not come into existence until 1953, the beginnings of Lufthansa's business can be found much earlier. In 1926 Deutsche Luft-Reederei became Deutsche Luft-Hansa, which served as Germany's flag carrier until the end of World War II in 1945, and in 1953 Lufthansa was created in West Germany, beginning the growth of the airline well-known today.
During the nineteen-fifties there were actually two companies named Lufthansa, with East and West Germany each claiming their own. The West German Lufthansa was the actually organization that was born out of the remnants of Deutsche Luft-Hansa, while the East German Lufthansa was a new company of its own creation. However, after a few years of legal conflict, East Germany ultimately rolled its Lufthansa into the larger East German flag carrier airline, Interflug.
In the context of Lufthansa's growth as a business, perhaps the most important feature of this era was the fact that the West German Lufthansa was not allowed to fly through East German airspace, meaning that it was not allowed to service Berlin's Tempelhof or Tegel airports, and instead had to center its business around more western cities like Hamburg and Cologne.
As air travel picked up in the nineteen-fifties, Lufthansa began to grow rapidly, although this growth was in a decidedly western direction, as the airline serviced western Europe and the United States.
In some ways one may view the trajectory of Lufthansa over the course of the latter half of the twentieth century as a kind of arc or wave, rising during the nineteen-fifties, cresting during the nineteen-sixties, and, beginning in the seventies, beginning to fall until reaching a low point at the beginning of the nineteen-nineties, after which dramatic actions served to turn around the airlines' fortunes, so that by the new millennium the airline was once again a global leader. Lufthansa's rise, fall, and subsequent rise is especially instructive because it helps to demonstrate how larger political, social, and technological developments have shaped the air transport sector, and seeing how Lufthansa succeeded where other airlines failed will be crucial to understanding the company's success. Furthermore, as will be seen, Lufthansa's economic history...
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