Published in April 2016 issue
By Ken Donohue
The Condor is one of the largest flying birds in the world. It has a wingspan of up to 10ft, which enables it to soar with ease, and a relatively long lifespan. It is then only fitting that it shares its name with Condor Flugdienst, a German leisure airline that has been soaring for 60 years.
In the decades following the ravages of World War II, West Germany saw rapid reconstruction and economic development. Known as the Wirtschaftswunder, or economic miracle, the strong employment growth gave West Germans more disposable income to spend on cars, household items, and travel. In the 1950s, to satisfy the demand for flights to tourist destinations, four partners—including two marine shipping companies, the German Lufthansa airline, and the German Railways—formed a new leisure airline called Deutsche Flugdienst, which, in English, translates to German Air Service. The airline took to the skies on March 29, 1956, with a pilgrimage flight to the ‘Holy Land’ on a 36-seat British-built Vickers 610 Viking 1B aircraft. Within a year, it added the Spanish islands of Mallorca and Tenerife to its network.
In 1961, with Lufthansa having acquired a 100% stake, the airline took over the operations of another carrier, Condor Luftreederei. The merged company took on the Condor name, laying the foundation for the development of one of the world’s leading leisure airlines. In the late 1960s, Condor began flying to long-haul destinations across the globe, including Thailand, Sri Lanka, Kenya, and the Caribbean. In 1971, Condor became the first leisure airline to operate the Boeing 747.
Over the years, Lufthansa sold off parts ofits equity in the airline, selling its remaining 24.9% stake in 2009. By the late 1990s, C&N Touristik, later renamed Thomas Cook AG, took a controlling interest in Condor, and, over time, the airline’s aircraft began sporting the distinctive blue and white Thomas Cook Airlines livery. Today, the Thomas Cook group of airlines includes Condor and three Thomas Cook-branded airlines in the UK, Belgium, and Scandinavia.
The master brand applied to all the group’s aircraft includes a white fuselage, punctuated with yellow engines, a ribbon of yellow and light gray on the aft of the aircraft, and a dark gray tail overlaid with a yellow heart. Given Condor’s strong brand reputation, the eponymous bird that once graced the German carrier’s tail livery remains a part of the airline’s new look on the aircraft winglets and on the front fuselage, below the cockpit. The condor also has a presence inside the aircraft.
The leisure market and the challenges facing leisure carriers such as Condor have changed over the decades. Forty years ago, the only role of the leisure airline was to do the flying for the tour companies that chartered the aircraft. However, starting 25 years ago, the tour operators would reserve only half the aircrafts’ capacity, forcing the airline to work with two or three different tour operators to fill its planes. About a decade ago, a further shift in the industry took place: the tour operators started to reduce their risk by taking even fewer seats, forcing the airlines to start selling tickets themselves.
“This was a dramatic change,” says Ralf Teckentrup, Condor’s Chief Executive Officer. “Today, we need to sell about half the seats on our aircraft, while the tour companies buy the other half. But I believe the tour operators will move away from buying allotments with just one airline and will shop around, putting more pressure on the leisure airlines.”
Teckentrup caught the aviation bug in the unlikeliest of places. He was studying industrial engineering in Hamburg and, while playing soccer, would look up at the planes on final approach to Hamburg Airport (HAM). He tells Airways that he was more interested in the planes than in what was happening on the soccer pitch. When he graduated, in 1986, he approached Lufthansa for a job and stayed with the German carrier for 18 years.
In 2004, he was asked to assume the top job at Condor, which, at the time, was struggling with huge losses. In 2003 alone, the airline had lost more than US$70 million. His first task was to quickly learn how a leisure airline works, what its key performance indicators were, and how seat pricing differed from that of a network carrier such as Lufthansa.
Teckentrup listened to staff, unions, suppliers and the airports. He was frank with each of them. “I told them we had two choices. We either shut the airline down, or we restructure. And, if we restructure, everyone has to pay a price.”
Within six months of Teckentrup taking over, the company implemented a restructuring plan aimed at getting more productivity out of the aircraft and crews by doing the same flying with 20% fewer planes and people. The airline hammered out more favorable contracts for catering, maintenance, and other services. In 2005, Condor made a $60 million profit, and has remained profitable since. In fact, Condor has had the best profit margin of all German airlines for six straight years, says Teckentrup, whose dogged determination to ensure a positive balance sheet has largely contributed to the airline’s recent success and growth.
“We must be profitable,” he says, as if there were no other option. “We fly to make money. I am not emotionally attached to any of our destinations. We give a new route a year or two to prove itself, and, if it doesn’t make money, we cut it.”
Over the past year, Condor introduced a number of new destinations to its network, and continued pursuing its strategy of avoiding large destinations where there is already a lot of competition. Teckentrup concedes that his airline can’t compete on those routes on which others are operating Boeing 747s and Airbus A380s. That is why, of the 10 routes that Condor operates to the US, Seattle (SEA) is the only one on which it competes with its national rival Lufthansa. The airline flies to more than 75 destinations on five continents, many of which are seasonal operations, and does so with a modest fleet of 46 aircraft.
“It’s expected that we will grow the business, as all successful airlines do,” says Teckentrup. “If you don’t, you lose market share. We anticipate growing our capacity by about 5%, which means adding one aircraft per year to our fleet.”
Each year, Condor conducts market research into potential destinations. After considering the pros and cons, the top five are presented to the senior leadership team. Typically, the airline opens a new route with a frequency of just two flights a week, then adding additional ones if there is demand. The airline does not offer daily service to any of its network destinations. This has its challenges, it admits, especially with respect to crew layover times. In the northern hemisphere summer, much of the airline’s capacity is allocated to transatlantic routes, primarily to the US and Canada. During the winter, the capacity is shifted to the Caribbean and tourist destinations such as Thailand and the Maldives. It’s a business model that is proving successful.
Condor’s fleet is made up of three types. Short- and medium-haul flights are operated by Airbus A320s and A321s, and Boeing 757s, while Condor’s Boeing 767s provide long-haul lift. “I love the 767. It’s a fantastic aircraft,” says Teckentrup. “It’s the smallest long-haul aircraft in the market and perfect for our operations. The Airbus A330 is a comparable aircraft, but it has a higher capacity than the 767, meaning we’d needmto sell more seats.”
In 2014, the airline completed a US$63 million refurbishment of its Boeing 767 interiors, which are laid out in three cabins—Economy, Premium Class, and Business. The new Business Class product rivals that offered by full-service carriers, but at up to 60% lower fares.
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“You don’t have a second chance to make a good impression,” says Teckentrup. “When customers walk onto one of our aircraft, I want them to see a clean, fresh look. People don’t talk about the age of the aircraft if the cabin looks nice and the service is good. If they see a tired and old product, they are less likely to return.”
On intra-European routes, passengers are more motivated by price, Teckentrup says, but, on long-haul routes, people make other considerations. With its competitive prices and comparable product, Condor is achieving an average year-round load factor of 86% in its Business Class. Loads for Premium Class are even higher. “There is a demand for the Premium services, especially when they are priced competitively,” he says. “Why should someone pay thousands of dollars more for a comparable product?”
Teckentrup has a simple philosophy. You can make money flying if you operate with a full airplane. But filling seats may be more of a challenge now that archrival Lufthansa is cutting into Condor’s core market by operating long-haul flights to leisure destinations through its reconfigured Eurowings subsidiary.
“I have a lot of respect for Lufthansa and the big machine that it is, but I don’t lose any sleep over this,” says Teckentrup. “Their new leisure flights might hurt us on certain routes, but I’m comfortable with our service offerings on the long-haul market, and we have a good relationship with our tour operator partners.”
On short- to medium-stage routes, Condor faces stiff competition from the likes of easyJet (U2), Ryanair (FR), and Air Berlin (AB).
Rather than dwell on the challenges, Teckentrup says the competition creates an opportunity for the airline to come up with innovative ideas to respond to market pressures. To this end, Condor has just launched a profit improvement program, while continuing to work on reducing costs and increasing ancillary revenues.
Despite the increase in competition, the future looks bright for the airline. The brand has a solid reputation in Germany, and as Condor soars to destinations around the world, more people are getting to know this historic airline.
THE CONDOR EXPERIENCE
Having experienced the airline’s Premium service to Frankfurt, which was good apart from the awful mess of a meal that was served for dinner, I was looking forward to sampling the airline’s Business Class on my return flight to Vancouver.
Given the airport’s large size, checkin at Frankfurt (FRA) was quick and efficient, with two counters dedicated for Business passengers located a short distance from the bank of Economy and Premium ones.
Business Class passengers have access to one of Lufthansa’s Terminal 1 lounges, which was conveniently located near my departure gate. From the lounge, which had the typical amenities one would expect, I could watch the airside activity. As boarding neared, I went to the gate. In the departure lounge, a representative of the airline announced that upgrades to Business Class were on offer for €350 (US$390). He even walked through the lounge, talking up the deal with passengers, and I noticed a few people taking advantage of the offer. A proactive way, I thought, to generate additional revenue. If something is priced right, the market will respond.
When the boarding signs indicated a new departure time, no explanation or apology was given at the gate for the delay, though the inside intelligence I had was that the inbound aircraft was late arriving from Anchorage. We commenced boarding at 14:50, our original scheduled departure time. The aircraft had a fresh and new feel to it, hiding the fact that it was more than 20 years old. With the Business Class cabin full, sparkling wine and orange juice were offered before takeoff. Doors closed at 15:30, at which time passengers were entertained with a safety video that was fun and cheeky, featuring lookalikes of, among others, Charlie Chaplin, Marilyn Monroe, and even the UK’s Queen Elizabeth. The announced flying time was of 10 hours. We took off from runway 25C, where the skill of the Air Traffic Controllers at Europe’s third-busiest airport was on full display, with simultaneous landings taking place on runways 25R and 25L. As we quickly gained altitude, I noticed a smaller aircraft taking off below us from the perpendicular runway 18.
The Flight Attendants (FA) offered a selection of magazines and began a drinks service shortly after take-off. They followed this with a multi-course culinary feast that included starters of Mexican salsa, marinated Black Angus beef, grilled halibut, and a salad. It was an explosion of tastes. There were three choices of mains; I selected the veal steak with ginger garlic sauce, vegetables and rissole potatoes. The FAs then came through with a cheese plate and more drinks and, just when I thought it was all over, came dessert.
With my stomach full, I checked out the seatback entertainment system, which featured a wide selection of movies, television shows, and audio programming. The 15-inch monitor offered excellent resolution. Condor’s Business Class cabin features 17 or 30 seats, depending on the aircraft, in a 2-2-2 configuration. The individual shell seats recline 170 degrees, and, when in the sleep position, stretch out 6ft (1.8m). Despite not being fully-lie flat, the seats were suitably comfortable. We tracked northwest from Germany over the North Sea and across Scotland’s Shetland Islands, before arcing north of Iceland, across Greenland and northern Canada. A couple of hours into the flight, more desserts and cheeses rolled through the cabin and, as we neared Vancouver, we were offered a tasty snack featuring an Asian spiced chicken skewer and spinach feta roll.
Condor has an exceptional and very un-leisure airline Business Class product. The catering was excellent and so was the service provided by the Flights Attendants—all at a fraction of the price one would pay on other airlines.