March 31, 2017 / 2:07 PM / 10 months ago

Lufthansa's Eurowings pushes Munich expansion in low-cost battle

BERLIN (Reuters) - Lufthansa’s (LHAG.DE) Eurowings is stepping up expansion at Munich airport in response to strong demand for low-cost flights, with plans to base two more planes there from 2018.

Eurowings started flying from Munich, a hub for Lufthansa’s core brand, on Friday and the unit’s CEO said demand had significantly exceeded expectations. The carrier will therefore base six A320 jets there in 2018, up from four this year.

“We’re as good as sold out over Easter and anyone wanting to book for the summer should hurry,” Karl Ulrich Garnadt said in a statement.

Low cost carriers have been slow to gain a foothold in Germany and currently account for about 15 percent of the market, against 50 percent for Europe as a whole.

While Eurowings, which also includes the Germanwings brand, is the largest low cost carrier in Germany, Ryanair (RYA.I) , easyJet (EZJ.L), and Wizz Air (WIZZ.L) have been growing strongly in the last couple of years.

Ryanair has stepped up the battle by starting flights from Frankfurt, Lufthansa’s main hub, leading the German flagship carrier to demand concessions from airport operator Fraport (FRAG.DE).

Lufthansa CEO Carsten Spohr said at an event on Thursday he was hopeful that a deal could be reached with Fraport on a reduction in fees, adding there was still no decision on whether to start Eurowings flights from Frankfurt.

    He also said Eurowings would eventually need more than 7 long-haul planes amid a rush by traditional rivals to also expand budget long-haul routes to compete with newcomers such as Norwegian Air Shuttle (NWC.OL).

    British Airways and Iberia owner IAG (ICAG.L) this month unveiled plans for a new low-cost long-haul business called Level that will fly out of Barcelona from June 2017 and Air France also wants to start a new low-cost division on long-haul leisure routes.

    There are no plans to start long-haul flights from Munich, a spokesman for Eurowings said on Friday.

    Reporting by Victoria Bryan; editing by Alexander Smith

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