The dispute between Condor and Lufthansa, which has been going on for years, over the conditions for feeder flights to long-haul flights of the holiday airline Condor has taken a new turn.
The Federal Court of Justice (BGH) recently decided that the previous agreement between the two airlines will remain in place until further notice. This decision brings temporary clarity to a conflict that has been simmering since the Corona pandemic in 2020 and has severely strained the relationship between the two German airlines.
A years-long legal dispute over feeder flights
The conflict began at the end of 2020, when Lufthansa terminated its cooperation with Condor in order to focus more on its own subsidiary Discover Airlines, which was to take over the holiday flight business.
Condor, a former subsidiary of Lufthansa, was dependent on the larger airline to operate feeder flights from numerous European cities for its long-haul flights to Frankfurt. Condor mainly offers holiday flights to destinations worldwide, while Frankfurt serves as the main hub for the holiday airline. The termination of the feeder cooperation by Lufthansa meant that Condor suddenly had to deal with higher costs and organizational challenges, which could lead to a significant competitive disadvantage.
Lufthansa insisted that Condor would have to accept the same, less favorable conditions that apply to other Lufthansa cooperation partners. Condor, on the other hand, relied on the particularly advantageous conditions that dated back to the time when it was part of the Lufthansa Group. These conditions secured Condor cheap feeder flights from Lufthansa, which was a crucial basis for the company to plan its long-haul flights.
The path through the courts
After terminating the agreement in 2021, Condor took the case to the Federal Cartel Office, which ruled in the airline's favor. The Cartel Office saw Lufthansa's decision as an abuse of its dominant market position, as feeder flights made up a crucial part of Condor's business model. However, Lufthansa appealed the decision and the case went to the Düsseldorf Higher Regional Court. The court initially ruled in Lufthansa's favor, paving the way for the planned change in conditions.
Condor then appealed to the Federal Court of Justice. The final decision of the Federal Court of Justice is not expected until the turn of the year 2024/2025, but the current decision means that the existing agreements must be maintained until then. This is an important interim victory for Condor, as an immediate change in the conditions for the feeder flights would have meant a significant increase in costs.
The economic importance of feeder flights
Feeder flights play a crucial role in Condor's business model. With over 300 feeder flights from more than 100 cities in Europe, Lufthansa ensures that numerous passengers can travel to Frankfurt Airport, Condor's main hub.
Without these feeder flights, Condor would have to resort to other airlines or alternative solutions, which would entail logistical and financial disadvantages. Lufthansa, on the other hand, argued that it had to defend its market position and its new interests - in particular the expansion of its subsidiary Discover Airlines.
Outlook: Continuation of negotiations or long legal dispute?
The BGH's decision gives Condor some breathing room for the time being, but the final outcome of the legal dispute remains uncertain. Condor CEO Peter Gerber has made it clear that an out-of-court settlement would be preferred for the holiday airline. "A solution that is viable for both sides would be better than continuing the dispute for years," Gerber explained in July 2024.
However, it remains questionable whether Lufthansa is still interested in negotiations. The airline has not yet commented on whether it would like to continue talks with Condor. Particularly in view of the fact that Lufthansa has established its own brand in the holiday flight segment with Discover Airlines, a quick agreement seems a long way off. For Condor, it remains an economic necessity to secure Lufthansa's low-cost feeder flights, while Lufthansa continues to push ahead with its own market strategy.
Impact on the Aviation Market
The dispute has implications beyond the two airlines for the entire aviation market. Lufthansa is Germany's largest airline and plays a dominant role in European air traffic. Condor, as a smaller competitor, is heavily dependent on the decisions of the market leader, which makes the conflict a case of market dominance and fair competition. The outcome of the legal dispute could therefore have a signal effect for other airlines that also rely on cooperation with larger airlines.
Overall, the case shows how interwoven relationships are in the aviation industry and how much corporate strategies can impact existing partnerships, especially in times of restructuring and new brands such as Discover Airlines.
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