What is bmibaby's role for LH group?

bmibaby - the low-fare subsidiary of Lufthansa owned BMI - is to serve Cologne and Munich from its key UK operating bases. Germany is a market that the carrier has not historically focused on, so why now?

Bmibaby's first German route will be a thrice weekly from East Midlands to Munich from September 17. From October 31, it will also serve Cologne (from Birmingham and East Midlands) as well as Munich four-times weekly from Cardiff.

bmibaby has four operating bases in the UK. The following table illustrates its current position in the market:

Data source:Flightbase 14-20 June 2010

The carrier has focused on the Midlands where it was used to compete with easyJet and Ryanair in East Midlands and to serve Birmingham which until recently had no Ryanair or easyJet service. Despite concentrating its market resource in the Midlands the carrier also has bases in Manchester Airport and Cardiff Airport two markets that again have not had significant Ryanair or easyJet presence.

Bmibaby has focused upon a strategy of serving leisure and sunshine routes from its UK bases, the carrier operates a low cost service with B737-300 and -500 aircraft equipment to popular weekend city markets such as Prague and Amsterdam to Spanish holiday resorts to destinations such as Alicante and Palma de Mallorca.

With its 5 leading markets from its UK bases being Amsterdam, Malaga, Alicante, Palma De Mallorca and Jersey the routes to Germany mark a shift in strategy for the carrier.

German Focus

With Lufthansa controlling BMI mainline and having implemented routes from London Heathrow to Dresden and Berlin Tegel, it would appear that Germany's national carrier has employed bmibaby to fly regional services from regional points in the UK to regional points in the Germany.

Lufthansa is integrating the network with its LCC Germanwings network competing with the low cost carriers between the UK and Germany.

What competition will it face on the UK-Germany sector from rival low-fare carriers easyJet and Ryanair. The table below shows the Ryanair and easyJet network from the UK to Germany.

Ryanair has a significant network between the UK and Germany with 137 weekly scheduled flights, with flybe serving 148 and easyJet 156 on a weekly basis

Source Flightbase 14-20 June 2010

Where to next?

There is a clear gap in outbound UK low cost flights from Manchester, Birmingham EMA and Cardiff. At Manchester, Germanwings already serves Cologne and Lufthansa serves Hamburg and Stuttgart, leaving Berlin, Hannover and Dortmund with no service from the LH group. However Flybe does serve Hannover.

At Birmingham there is no existing Germanwings service, LH only serves Dusseldorf, Frankfurt and Munich. However Flybe serves the old BA connect routes of Dusseldorf, Frankfurt, Hannover, Hamburg and Stuttgart so the non served markets again suggest only Berlin and Dortmund as opportunities unless they want to compete with Flybe.

bmiBaby is effectively becoming part of Germanwings and eventually the brand could disappear, the same could be said of BMI regional which has started flying for fellow star member Brussels Airlines offering cheaper and better equipment size, for example having recently added frequencies into Newcastle from a daily to a triple daily.