Opportunities and Uncertainty in Germany's Largest Travel Segment

With airline bookings representing more than half of all travel supplier revenue in Germany, air is easily the country's largest travel segment. And following the October 2017 bankruptcy of Air Berlin – a key player in the market – new opportunities and challenges have emerged in the space.

In the wake of insolvency, both Lufthansa and easyJet were quick to snap up some Air Berlin assets, including aircraft and take-off and landing slots at Berlin's Tegel airport. More recently, tour operator powerhouse Thomas Cook purchased Air Berlin Aviation, a subsidiary of the failed carrier, in a bid to boost its presence in the German market. As the carve-up continues, competition in Germany's air segment is heating up. With the share of offline bookings declining, all airlines are focusing on their online channels. Lufthansa, long the country's dominant carrier, is stepping up its efforts to drive direct online bookings, most notably via the €16 distribution fee it imposes on all GDS bookings. But the country's flag carrier faces intense challenges from LCCs including easyJet, Ryanair and others, all of which attract a large share of bookings through their websites and mobile apps.

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Overall, aggressive online direct strategies will make it difficult for OTAs and other online intermediaries to compete, and their share of the online market will decline over the next several years. Meanwhile, full-service Middle Eastern carriers such as Emirates, Etihad and Qatar Airways are committed to the German market, and represent a significant threat to Lufthansa and others.

For more on Germany's dynamic airline segment and additional insight into Europe's largest travel market, check out Phocuswright's German Online Travel Overview Thirteenth Edition.

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