Troubled German airline forced to reflect costs to enhance competition...
Lufthansa, Europe's second largest airline, has been ordered to raise prices for flights between Frankfurt and Berlin to encourage competition from smaller rival Germania Fluggesellschaft, the German Cartel Office said.
Lufthansa carries about 85 percent of the air traffic linking Germany's financial center with its political capital and the airline must end ?aggressive? price cuts so that competition on the route can grow, said Cartel Office President Ulf Boege.
Lufthansa has slashed fares by 60 percent on the route in response to the German no-frills competitor, Germania's, entry into the market last year. The cartel office said last month that the reduced fare would not cover Lufthansa's average cost per flight. Lufthansa offers a free meal on board, while Germania keeps costs low by offering no in-flight food or drinks.
The larger carrier's pricing strategy is to ?force out Germania on this route? and later ?compensate for losses by raising the price,? said Boege at a press conference.