Mark Pilling: October 2005 Archives

There is no bucking the trend it seems when it comes to regional operations at Europe's mainline carriers. Swiss is the latest major to hive its regional flying into a separate unit with the launch of Swiss "European" this week. It will put all of its fleet of 18 Avro RJs and seven Embraer ERJ-145s into the new subsidiary.

The carrier says it has wanted to make this move for a couple of years, and has tried before, but the project failed as unions failed to agree. Now, with crucial collective bargaining agreements expiring by the end of this year, Swiss is taking the plunge. Talks are underway with pilots and cabin crew to transfer to the new company. For the time being they will work on their current Swiss contracts until new deals are reached.

The aim is for Swiss European to achieve a lower cost structure compared to Swiss. It will not disclose how much it will save with this initiative, but it will contribute to the carrier's restructuring programme to improve its operating result by SFr300 million ($240 million) by 2007. Swiss hopes to breakeven next year and make a profit in 2007.

The launch of a new regional airline in Switzerland is a reminder of another successful regional from this country: Crossair. Now that was an interesting airline. It grew rapidly and became the benchmark for Europe's burgeoning regional sector in the 1990s. The slide started when it moved under the Swiss umbrella, and eventually took over its own parent. Now it is separated once again, although the Crossair name is still assigned to the history books.

Turning the undoubted opportunity of extracting greater sales from the airline's best-in-class website is a top priority for new British Airways chief executive Willie Walsh (below left at BA's Waterside HQ with Paul Coby, the carrier's CIO). Opening the carrier's IT Fair this week at its headquarters near London Heathrow, Walsh plans significant investment in the website with the emphasis on dynamic packaging. "Our recent refocus on ancillary revenues is paying dividends," he said.

Dynamic packaging is where customers are invited to buy other elements of their travel - hotels, car hire, insurance, tours etc - at the same time as they buy the airline ticket. It is more than simply clicking through to another supplier's website. "This is where travel companies put together deals," says BA's chief information officer Paul Coby. "It is as exciting and revolutionary as our original calendar-led selling."

Technically this is a challenge for an airline's IT team, particularly to obtain acceptable response times as customers seek quotes, and it is a challenge on how to package different products. Bascially the issue is how much discount to offer travellers for each new purchase. "You need to revenue manage all the extra things you are selling," says Coby.

BA already has some dynamic packaging on its website, with opportunity to upgrade to other fare classes for example. "The take-up is running twice as much as the business case," he says. Over the coming months BA will be promoting its dynamic packaging and further products will be added during 2006.

EasyJet is another carrier pushing on with the concept. It added insurance into the flight booking process earlier this year, and has just signed a deal with Europcar to offer car hire too. The car hire price is calculated in the background while the passenger is booking the flight and offered once the flight is selected. "We are nearer to offering a complete travel solution to our customers," said Rachel Start, online partnership manager at easyJet.