Auf Wiedersehen Air Berlin- what went wrong?

Next year should be Air Berlin’s 40th birthday. From a small charter operation founded in 1978, the airline grew to become Germany’s second largest, and Europe’s seventh biggest. 8,600 staff work for the carrier which up to recently, was flying to 42 destinations with a fleet of 114 planes. I have a small soft spot for the airline, its staff, history and most of all its home base, my second favourite city in the world.

But nothing seems to be going to save Air Berlin. The airline has been in trouble for some time. I had hoped Etihad might have turned them around but that did not eventuate and Etihad having abandoned Alitalia in April, cut Air Berlin loose in August.

Air Berlin has had one just one profitable year in the last decade. Its losses over the time amount to over two billion euros. ($US2.4 billion). Last year, it lost almost 800 million euro alone.

Its leadership has been disjointed with six CEOs in nine years. most of them, interim or acting. As a result, Air Berlin’s strategy has been disjointed and incoherent. They entered One World in 2012 but never really seemed to make use of the alliance. While they offered codeshare flights, I never saw any real attempts to actively partner with American to strongly market European feeder service options with them.  airberlin did not participate in the oneworld transatlantic joint venture with American, British Airways, Finnair, and Iberia.

Where was airberlin in this?

Any attempt to build a relationship with OneWorld partner, Qatar was undoubtedly made impossible with their significant ownership Etihad, by Qatar’s rival politically and financially.

Route planning was all over the place. They seemed to contract and expand US services all of the time. For example, they launched to great fanfare Berlin-Dallas and then cancelled it a few weeks later.They launched Air Berlin Turkey in November 2011 and then gave up on it by March 2013.  Air Berlin’s Spanish strategy was all over the place. Then the last two years have seen a constant flow of abandoned routes.

In 2010, Air Berlin founded Follow Me Entertainment. I still do not know why.

They ordered then reduced, then amended and then cancelled their order of 25 Boeing 787s together with 18 737-800s.

They went “down market” with their service and then added business class across the fleet. The standard of the Business class service was inconsistent. Their Business lounge at Berlin was a shocker.

All in all, Air Berlin offered fewer and fewer compelling reasons to fly them, apart from the heart shaped Lindt chocolate that the airline gave to passengers!  Even then, I had a flight where the chocolate failed to appear which further illustrates their inconsistency. Customers rate them just 5/10 on Skytrax whilst giving subsidiary Niki 8/10.

There are three other causes which lay outside the airline’s control but none are the sole reason for their demise:

  1. The Berlin airport debacle which has seen the opening date for Air Berlin’s new hub at Brandenberg shift from 2010 to 2019
  2. Stiff competition on the German -Spanish routes
  3. the declaration that over a third of the routes Air Berlin and Etihad were code sharing were in fact illegal as they were  ot covered by the German-UAE bilateral air traffic agreements

Air Berlin was able to continue flying with the help of a German government loan On 9 October 2017, they announced that it would cease all of its own operations by 28 October 2017. On 12 October 2017, Lufthansa bought 81 of airberlin’s aircraft and agreed to take on 3000 workers together for 210 million Euro along with AirBerlin;s subsidary Niki. Lufthansa plans to use Air Berlin planes to expand its Eurowings budget airline business. Ryanair has protested the move.

On October 16, we should know if Alitalia, will be sold in its entirety, broken up or liquidated.

This is not the end of major changes ahead for European carriers. The unrelenting growth of the low cost carriers (Easyjet, Ryanair, Wizz, Wow and Norwegian) and the continuing expansion of the Gulf carriers (Etihad, Emirates, Qatar) will continue to challenge their markets at the top and bottom ends. Fuel will climb back up again and many destinations are becoming less attractive for tourist (USA, Turkey, Egypt etc).  It is going to be tough. Who will blink next?

One World has an issue because they have lost three airlines from Europe: Aer Lingus which withdrew from the alliance, Malev who went belly up and now Air Berlin.

In the meantime, I am more than a little sad about Air Berlin and wish its staff my thanks for their service, my regrets at their present circumstances and my hopes for the future.

Auf Wiedersehen Air Berlin.

Boeing 737 D-AHXC on the tarmac at TXL Tegel airport

 

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Comments

  1. Good analysis of the airberlin failure. I think one issue to add is their acquisition strategy (or the rules about rising dead horses): they acquired poorly performing airlines and didn’t do anything to fix them, resulting in a conglomerate of broken airlines without any direction. Tying together several dead horses is not going to make them run any faster!
    I’m sad to see them go as well – I still have one open topbonus ticket on a partner airline to complete as final farewell!

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