Austrian Airlines (OS, Vienna) has declared that it will have to reposition itself in light of the rapid growth of low-cost carriers (LCCs) at its home base Vienna.

With the threat of losses in 2019 and 2020 after six profitable years, the Star Alliance carrier will attempt to counteract these unfavourable market developments with a package of operational and cost-saving measures.

The carrier's management board opinion, voiced by its Chief Commercial Officer Andreas Otto, was very clear: “We will not retreat a single millimetre and will maintain our premium strategy.”

As a result of this defiant stance, the airline is bundling its fleet strength in the Austrian capital city and will attempt to stand up to the encroaching LCCs.

Although Austrian Airlines remains the largest seat provider in Vienna, commanding 42% of weekly capacity, which jumps to nearly 50% when partner Eurowings (EW, Düsseldorf) is included, it is facing increasing pressure from LCCs like Lauda (OE, Vienna), Wizz Air (W6, Budapest), and easyJet (U2, London Luton) which between them control 20% of seats in the market.

Its #DriveTo25 strategy will see all of its available aircraft in Austria stationed in the country’s capital city to combat the raging price war. In addition, all crew bases in regional cities across Austria are being shut down.

Austrian Airlines is getting support from the Lufthansa Group, with flights to Germany from Austria’s regional airports gradually being operated by Lufthansa (LH, Frankfurt Int'l). For example, the Salzburg to Frankfurt Int'l route will be switched from Austrian Airlines to Lufthansa from December, allowing the former to free up aircraft.

In order to further defend its Vienna gateway, Austrian Airlines will replace its eighteen Q400s with ten A320s, in the hope of driving extra productivity. The first additional A320 will join the fleet this month.

“The replacement of the aircraft and the closer cooperation with our sister company Eurowings enables us to bundle our fleet strength in Vienna," Otto said.

Starting in January 2020, Eurowings will wet-lease four aircraft to Austrian Airlines. This will allow the two airlines to more closely coordinate their routes, enabling new direct flights to Barcelona El Prat, Birmingham Int'l, Nuremberg, Rome Fiumicino and Zadar to be added to the flag carrier's network.

Austrian Airlines will eliminate its summer seasonal route to Miami Int'l from its Summer 2020 schedule despite all efforts made by the carrier to get the sector to turn a profit. The last flight from Miami will land in Vienna on November 8. Flights on the Vienna to Los Angeles Int'l summer season route will be reduced from daily to 5x weekly in Summer 2020. Decisions on the redeployment of this long-haul capacity have still not been made by the airline.

In conjunction with these operational and fleet alterations, the carrier is initiating significant cost-saving measures to reduce in-house costs by EUR90 million euro (USD 100 million) annually from 2021, via efficiency and productivity improvements. Some 700-800 jobs will likely be impacted by the “PE20” programme, with many of the job losses expected to be absorbed through natural staff attrition.

Concluding the carrier's thoughts on its repositioning strategy, Austrian Airlines Chief Executive Officer Alexis von Hoensbroech said: “We have to reposition ourselves in order to survive the brutal competition of the low-cost airlines. In part, the measures will be painful because they drain resources that we have built up over the past years. However, at the same time, they are necessary in order to safeguard the future of Austrian Airlines as the leading airline in Austria.”