The European Commission's conditions imposed in clearing Swissair's 49.5 per cent stake in Sabena may yet boost Belgium's private carriers but other European airlines seem less inclined to challenge the incumbents.

The deal, cleared in late July, will see Swissair pay BFr6 billion ($212 million) for slightly under half of the Belgium flag carrier. In return the Swiss carrier gains limited access to the European single market (see June issue, p13).

After blocking a Belgian government proposal to grant Sabena an opt out on social costs, the Commission is now satisfied that the deal does not involve state aid or contravene any ownership and control laws, leaving Brussels to focus on the competition aspects of the equity alliance.

The Commission has set conditions to open up the routes between the two home markets, where the partners enjoy a duopoly. Switzerland is not a member of the European Union and is making slow progress on gaining access to the third package.

These conditions, which apply until the end of the winter schedule in 1999/2000, are:

* Swissair has to give up a maximum of 12 daily slots at Zürich and Geneva to any carrier wishing to operate the Brussels route. Sabena, in turn, must vacate a maximum of 18 daily slots at Brussels to any rival wanting to serve these two cities as well as Basle and Bern.

* Swissair and Sabena will have increases in their aggregate frequencies on those four routes capped at 25 per cent above present levels.

* The two partners must offer new entrants with no frequent flyer programme participation in their joint FFP.

* The two governments must allow multiple designation, lift capacity restrictions and allow four European Economic Area carriers fifth freedom rights on the four routes on a 'first come, first served' basis.

But there appears little interest from any of the European majors to serve those routes on a fifth freedom basis. Only British Airways appears prepared to even consider the possibility of serving Switzerland over Brussels.

The UK carrier already operates over the Belgian capital on its Manchester-Rome service using the third package. But a senior BA official is still sceptical about the chances of using the fifth freedom rights from the Swissair-Sabena deal. 'The best way to build up operations is on a sensible strategic basis rather than through opportunities arising for other reasons.'

But private Belgian operators EuroBelgian Airlines Express and VLM are both considering serving Switzerland. 'We are studying the frequencies we can offer on the route,' says EBA's managing director, Victor Hassan, who is looking at low-cost, low-fare services to either Geneva or Zürich from Brussels. Hassan says services could start by the end of the year.

Regional operator VLM has applied for traffic rights to serve either Geneva or Zürich from Antwerp, but 'nothing concrete has been decided,' says marketing and sales manager Herman Vermeiren.

One common problem facing both Swissair and Sabena is labour unrest. Swissair must deal with its disgruntled pilots (see feature, p92), while a 'social' mediator is trying to resolve the dispute between Sabena and its six unions.

Management wants a 5 per cent productivity increase, as it restores pay back to 1993 levels, when staff took cuts ranging from 2 to 17 per cent and accepted a pay freeze.

Source: Airline Business