Lufthansa's low-cost carrier Germanwings is aiming to woo more business passengers in its battle against cut-throat competition from Ryanair and easyJet.
Germanwings will from July 1 next year allow business class customers to exclude options such as priority check-in, catering a la carte, a second piece of luggage and use of first-class lounges, aiming to appeal to the more frugal mood among many employers.
"Business travelers now are being ordered to fly economy class by their companies," chief executive Thomas Winkelmann said on Thursday. Excluding costly options could allow executives to still take a business class seat without being bumped down to economy.
Lufthansa is switching some of its short-haul operations to Germanwings, excluding flights out of its Frankfurt and Munich hubs.
The move is in line with a trend among European airlines, with Air France-KLM increasing its use of Transavia and British Airways parent IAG planning to convert most of Iberia's short-haul operation to low cost arm Iberia Express.
Carsten Spohr, Lufthansa board member for the airline's Passengers business, told reporters that out of the more than EUR€900 million (USD$1.2 billion) savings his division would contribute to the group's cost-cutting, EUR€200 million would be from Germanwings.
As part of a revenue-boosting drive in the Passengers division, Lufthansa said it would also launch 'premium economy' for intercontinental flights. Its price category would be lower than business class but higher than economy.
A "high two-digit" million euros investment is planned for premium economy and EUR€30 million for the new Germanwings, Lufthansa chief executive Christoph Franz said on Thursday.
Lufthansa said Germanwings will offer three different prices, starting from €33 one way for "basic", covering only the ticket, to "best", from €199 to €399. "Smart", the category in the middle, would be priced from €53.