{"id":91693,"date":"2026-01-08T00:00:00","date_gmt":"2026-01-08T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/logistics\/?p=91693"},"modified":"2026-01-11T10:43:06","modified_gmt":"2026-01-11T10:43:06","slug":"pick-your-battles","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/logistics\/2026\/01\/08\/pick-your-battles\/","title":{"rendered":"Legacy carriers are facing a choice: Pick your battles or lose for good"},"content":{"rendered":"<p style=\"margin: 0;line-height: 1.15;text-align: left;padding: 12pt 0 12pt 0\"><strong>Shifting grounds: <\/strong>European legacy carriers have operated on a hub-and-spoke model for decades that relied on a dirty secret \u2014 short-haul feeder flights were a loss-leading necessity designed solely to fill high-margin long-haul flights. But as Lufthansa\u2019s <a href=\"https:\/\/newsroom.lufthansagroup.com\/en\/lufthansa-group-is-consistently-pursuing-its-strategy-and-aims-to-significantly-increase-profitability\/\" target=\"_blank\" rel=\"noopener\">latest turnaround plan<\/a> reveals, that model may have finally broken under the weight of ruthless competition from Gulf and low-cost carriers (LCC), as well as a mix of stringent domestic aviation taxes.<\/p>\n<p style=\"margin: 0;line-height: 1.15;text-align: left;padding: 12pt 0 12pt 0\"><strong>How it\u2019s coming down: <\/strong>Europe\u2019s largest carrier (by revenue) rolled out a <a href=\"https:\/\/newsroom.lufthansagroup.com\/en\/lufthansa-group-is-consistently-pursuing-its-strategy-and-aims-to-significantly-increase-profitability\/\" target=\"_blank\" rel=\"noopener\">turnaround plan<\/a> last September that pares back domestic feeding and capacity. The plan would see Lufthansa cut 4,000 jobs by 2030 and <a href=\"https:\/\/newsroom.lufthansagroup.com\/en\/lufthansa-group--in-summer-2026-with-over-14000-weekly-connections-to-330-destinations-in-around-100-countries\/\" target=\"_blank\" rel=\"noopener\">axing more than 50 frequencies<\/a> from its summer 2026 schedule, hitting domestic links such as Munich\u2013Cologne, D\u00fcsseldorf\u2013Berlin, and Frankfurt\u2013Leipzig\/Nuremberg. Regional services from Frankfurt to Toulouse and from Munich to Tallinn and Oviedo will also be suspended next spring.<\/p>\n<p class=\"tag-border-left\">Double trouble-<\/p>\n<p style=\"padding: 0;margin: 0;line-height: 1.15;text-align: left\"><strong>Lufthansa is currently caught in a strategic squeeze.<\/strong> From the bottom, budget carriers are \"ruthless\" efficiency machines, siphoning off market share from legacy carriers while \u201cmanufacturing demand\u201d at prices legacy airlines cannot match, John Grant, a partner at Midas Aviation, told EnterpriseAM. Unlike legacy carriers, they \"maximize the number of hours their aircraft fly\" and do not wait for connecting passengers, he added.<\/p>\n<p style=\"padding: 0;margin: 0;line-height: 1.15;text-align: left\"><strong>From the top, Gulf carriers have moved from being simple long-haul competitors to <\/strong><strong>becoming local bypasses<\/strong>. Etihad is aggressively moving into what is known as \u201csecondary city\u201d hubs in Europe, with direct services to Prague, Warsaw, Tbilisi, and Bucharest \u2014 all routes that have historically been strong for Lufthansa. By offering different scheduling and price points, Gulf carriers are providing an alternative that renders the Frankfurt hub unnecessary for many travelers, Grant told us. \"Choice is what the market wants,\u201d he added.<\/p>\n<p class=\"tag-border-left\">The drivers: margin wars and tough policies-<\/p>\n<p style=\"padding: 0;margin: 0;line-height: 1.15;text-align: left\"><strong>The gap is real: <\/strong>Middle Eastern carriers lead the industry with a <a href=\"https:\/\/www.iata.org\/en\/pressroom\/2025-releases\/2025-12-09-01\/\" target=\"_blank\" rel=\"noopener\">9.3% net margin<\/a> and a $28.60 net yield per passenger, while European peers struggle with just $10.90. The gap is so wide that the high margin in our region includes a spate of loss-making operators such as Kuwait Airways, Grant told EnterpriseAM.<\/p>\n<p style=\"padding: 0;margin: 0;line-height: 1.15;text-align: left\"><strong>Catching up on this gap is further complicated by Europe\u2019s tight compliance landscape, <\/strong>whereas the Gulf continues to build up its market power through state-backed incentives. Under the <a href=\"https:\/\/transport.ec.europa.eu\/transport-modes\/air\/environment\/refueleu-aviation_en\" target=\"_blank\" rel=\"noopener\">RefuelEU<\/a>, carriers face a mandatory 2% SAF blend that started back in January 2025, with double-price <a href=\"https:\/\/geodis.com\/blog\/sustainable-logistics-and-decarbonation\/eu-saf-mandate-complete-guide-shippers\" target=\"_blank\" rel=\"noopener\">penalties<\/a> for missing the target \u2014 something that Grant says is inevitable given SAF supply chain snags and price. Meanwhile, the UAE is making SAF goals <a href=\"https:\/\/www.sustainableaviationfutures.com\/saf-spotlight\/mena-uae-saf\" target=\"_blank\" rel=\"noopener\">voluntary<\/a>, with 1% target and plans to produce some 700 mn liters of SAF annually by 2030.<\/p>\n<p style=\"padding: 0;margin: 0;line-height: 1.15;text-align: left\"><strong>These policies have real market repercussions.<\/strong> For example, EU rules apply only at departure, meaning that a Paris-Doha-Singapore flight would require paying the green premium only on the first leg from Europe \u2013\u2013 a loophole that could <a href=\"https:\/\/www.seo.nl\/wp-content\/uploads\/2022\/03\/2022-16-Aviation-fit-for-55-final-report-summary.pdf\" target=\"_blank\" rel=\"noopener\">divert<\/a> around 24% of long-haul traffic to non-EU hubs.<\/p>\n<p class=\"tag-border-left\">The fix-<\/p>\n<p style=\"margin: 0;line-height: 1.15;text-align: left;padding: 12pt 0 12pt 0\"><strong>Mind your lane, win your race: <\/strong>Lufthansa\u2019s true challenge is internal \u2014 it must get its cost base, network, and distribution right, Grant told EnterpriseAM. While legacy airlines often try to be \"too smart and too clever,\" survival now depends on \"knowing what you're good at and staying with that,\" he added. Subsidizing feeders no longer works \u2014 instead, legacy carriers like Lufthansa need to focus on where they can still turn a positive margin.<\/p>\n<p style=\"margin: 0;line-height: 1.15;text-align: left;padding: 12pt 0 12pt 0\"><strong>This is why Lufthansa is now repositioning around long-haul <\/strong><strong><a href=\"https:\/\/www.reuters.com\/business\/aerospace-defense\/lufthansa-projects-6-long-haul-flight-growth-2026-pursues-turnaround-2025-12-18\/\" target=\"_blank\" rel=\"noopener\">returns<\/a><\/strong><strong>. <\/strong>The group is targeting 6% capacity growth on long-haul passenger routes in 2026, anchoring a broader push to lift margins to 8%\u201310% between 2028 and 2030. Meanwhile, short-haul capacity growth will be deliberately capped, with efficiency \u2014 not volume \u2014 driving network decisions.<\/p>\n<p style=\"margin: 0;line-height: 1.15;text-align: left;padding: 12pt 0 12pt 0\"><strong>A case in point:<\/strong> If you\u2019re planning Lufthansa's network in Frankfurt, why fly a half-full Frankfurt-Munich, when the same aircraft can run Frankfurt-Hethrow at the same time, carry more passengers, and attract more business traffic \u2014 while still feeding long-haul networks, Grant argued.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shifting grounds: European legacy carriers have operated on a hub-and-spoke model for decades that relied on a dirty secret \u2014 short-haul feeder flights were a loss-leading necessity designed solely to fill high-margin long-haul flights. But as Lufthansa\u2019s latest turnaround plan reveals, that model may have finally broken under the weight of ruthless competition from Gulf [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":91694,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[180],"tags":[145,179,17,27,404,129],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-91693","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-enterprise-explains","tag-aviation","tag-enterprise-explains","tag-enterprise-logistics","tag-gcc","tag-lufthansa","tag-uae","wpautop","entry"],"acf":{"mongo_id":"8baa4313-c432-4b15-8cb4-6afa3558fd8d","order":"5","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/2\/415.jpg","photo_position":"above","homepage_title":"","full_issue_title":"How European carriers are responding to rising Competition from Gulf, budget players","related_issue":[91685],"teaser":"","photo_link":"","related_sponsor":"","voice_url":"","en_translation_ref_id":"","section_story_id":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Legacy carriers are facing a choice: Pick your battles or lose for good - Logistics<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/logistics\/2026\/01\/08\/pick-your-battles\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Legacy carriers are facing a choice: Pick your battles or lose for good\" \/>\n<meta property=\"og:description\" content=\"Shifting grounds: European legacy carriers have operated on a hub-and-spoke model for decades that relied on a dirty secret \u2014 short-haul feeder flights were a loss-leading necessity designed solely to fill high-margin long-haul flights. 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