At the launch of the new "Swiss" flag carrier, the airlines management made it clear that the fight for intercontinental hub status is far from over. With a 30% cut in capacity, the company believes that transfer traffic will fall from 60% to close to 40% of traffic, while it "gains terrain" taken by other European carriers after Swissair's collapse.
"Switzerland needs a new intercontinental carrier," chief executive Andr‚ Dosé asserted at a press conference to announce the new brand in late January. His executive vice-president sales & marketing Arjen Pen claims Swiss will be the fourth-largest carrier in Europe by 2003. Despite this fighting talk, the launch of the "new" carrier was subdued - perhaps reflecting the fact that popping champagne corks would not have looked good, given that Swissair's creditors are still waiting for their money.
The "Swiss" brand is designed to recapture Swissair's former panache, while fending off any possible legal claims from these creditors. The legal name, which will also be quoted on stock exchanges, is Swiss Air Lines. This full legal name was rumoured to have been the preferred choice of management, until lawyers, mindful of claims from creditors, warned it may be too close to Swissair. Swiss is understandably keen to distance itself from Swissair, and Dosé admits that they may be forced to fight a rearguard battle with at least some creditors.
The somewhat convoluted process, which saw Crossair take over Swissair's flying operations, while the rest of the group - and its debts - were left behind, has certainly raised a few eyebrows. However, Dosé is adamant that the new airline can leave this troubled recent history behind and "break new ground".
The attempt to build an alternative to the three main global alliances had already been buried by former Swissair Group chairman Mario Corti. What is perhaps new, is the urgency with which the carrier is now seeking to join one of these alliances, and the willingness to put a timescale on the decision.
Dosé and Pen say a choice will be made by the end of March, although, in the past, Corti has played down the importance of alliance membership, preoccupied rather with trying to save the former Swissair from financial ruin.
Many of the old questions surrounding an alliance decision remain, however. For instance, is Zurich too near Vienna and Munich to join the Star Alliance? Under the Star constitution, Austrian Airlines - a major competitor for east European destinations in particular - could veto Swiss's entry into Star. Pen says: "If you convince the biggest alliance partner [ie Lufthansa], then they will convince their smaller brothers and sisters."
He suggests that Swiss is trying to attract alliance partners by offering itself as a strong niche player in certain markets. "For instance, we have twice as many services to Africa as to Lufthansa," he adds.
Pen also suggests American Airlines, a codeshare partner of Swiss, and formerly of Swissair, is keen for the new carrier to join oneworld. Dosé dismisses the suggestion that oneworld's European partner, British Airways, may have other things on its mind, given the failure of the antitrust bid with American, an internal restructuring in the face of heavy losses, and a developing relationship with KLM.
"It does not take much time to make a decision in principle," Dosé says. "We do not need to have all the details in place by the end of March, we just need to know what direction we are going in." What is clear is that Dosé is not keen to follow the strategy of carriers such as Continental, JAL and SAA, which are concentrating on a series of bilateral agreements rather than committing to a single alliance.
But Swiss can at least go into alliance talks with some level of financial stability, thanks largely to generous assistance from the Swiss government and some of the regions.
Swiss is negotiating a 35% wage reduction with former Swissair pilots, and, despite some tensions between the rival cockpit unions at Crossair and Swissair, the company should be able to achieve substantial savings. However, history shows that pilots are likely to look for parity with their counterparts at other European majors once the airline is operating successfully.
Swiss may well have a cost advantage over at least its major north European competitors, as Dosé claims, with 15% cost reductions on long-haul and 7% on short-haul compared with Swissair.
He admits that this is likely to last for two or three years at most, however. By then, Swiss's future will be much clearer.
Source: Airline Business
