First off, let's clear out some misconceptions here - Lufthansa still operates flights out of Berlin's Tegel airport, but most (if not all) of those flights are short-haul ones and the former long-haul international routes that they did have (such as those to New York City) were scrapped due to their unprofitability and low load factors. So, what is the reason then as to why Lufthansa doesn't utilize Berlin as one of its main hubs?
Well, it's not just one. For starters, the economics involved with passenger transport at Berlin are different to those of Munich, Frankfurt, or even Dusseldorf. The former three cities are the main business, industrial, and economic commerce centers of Germany, which brings in a lot of consistent, premium-ticket holding business travelers. This in turn equals lots of revenue for the company, especially with the rising cost of fuel prices and Lufthansa's notoriously poor long-haul fuel efficiency performance; operating routes to cities that are profitable for the airline are going to bring in more revenue.
Berlin may be Germany's largest city by population size, however, a large majority of travelers going to and from Berlin are leisure travelers, and are more likely to go with a lower cost carrier for shorter flights out of Germany as opposed to paying a higher fare for a full service airline like Lufthansa. Airlines such as the now defunct Airberlin and Germanwings, (which mind you is being merged into Eurowings, which is also part of the Lufthansa group parent company) along with some of the non-German, low cost airlines such as Easyjet, Norwegian, and Ryanair are also getting a large market share of the Berlin leisure travelers. This is because travelers who are going on holiday don't want to spend a lot on air travel for a shorter haul flight as opposed to the long haul premium business executive and employee travelers going to and from Germany's main economic epicenters of industry and commerce.
In addition to the intra-European competition, Lufthansa is also focusing its efforts elsewhere than in Berlin due to the rapidly expanding international market share of the "big 3" gulf carriers in Emirates, Etihad, and Qatar.
It seems though, as if Lufthansa has put Berlin on a lower priority issue for the airline compared to its three main hubs in Frankfurt, Munich, and Dusseldorf. Instead, it is focusing its efforts on protecting its important revenue flow on the most profitable routes and continuing to offer competitive passenger experiences and products in order to maintain its international market share with the rest of the middle eastern airlines. This doesn't mean that Lufthansa will never get around to serving Berlin more extensively, but rather only a delay for the foreseeable future unless something changes drastically, whether that be with passenger demographics, a business/tourism influx in Berlin, or something of a similar circumstance. We could also potentially see the use of the Lufthansa Group subsidiary Eurowings to launch long-haul, international flights out of Berlin to be competitive with other international low cost carriers such as Norwegian, to try and regain a hold of the market share once more.
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