After more than a year of overtures, Swiss is finally close to negotiating a codeshare deal with British Airways that would clear the way towards its long-sought membership of the oneworld alliance.

Swiss has made no secret of its wish to join oneworld virtually since its launch in February 2002 from the ashes of the old Swissair. However, oneworld has consistently said that it would first need to forge a bilateral relationship with BA. For its part, the UK carrier has been lukewarm about any deal with Swiss.

BA's concern had centred on exactly what Swiss would bring to the party as it attempted to recreate a hub operation at Zurich. However, over the last few months Swiss has radically scaled back its ambitions in the face of mounting losses. In June, the carrier announced 3,000 job losses and the withdrawal of 34 aircraft.

In the wake of this downsizing, Swiss has also been able to start negotiations with BA on a "strategic partnership" involving codeshare agreements on services between Switzerland and the UK. This should form the basis of its eventual entry into oneworld.

Swiss already has agreements in place with all of the oneworld partners except BA and LanChile. It has full strategic partnership agreements with four of the eight partners: American Airlines, Finnair, Iberia and Qantas.

At the start of June, American reduced the extent of its codesharing arrangement with Swiss, which includes some behind and beyond services. However, this decision was taken at the beginning of the year, when uncertainty over the future direction of Swiss was at its height.

Lufthansa, Star Alliance leader in Europe, has also been talking to Swiss, although most analysts see BA as the more likely option, given the proximity of Zurich to Munich and Frankfurt - not to mention the Vienna hub of Star member Austrian Airlines.

Oneworld, on the other hand, is relatively weak in this region, with Aer Lingus, Iberia and Finnair all operating on the fringes of Europe. Swiss has always made it clear that it sees oneworld as its preferred option.

There has been speculation whether Lufthansa or BA would take a stake in the struggling carrier, although most commentators see this as unlikely given the precarious financial situation at Swiss. "I can't see it, although they might dangle this as a carrot in the longer term," says one London-based financial analyst.

On the regulatory front, BA offers six flights a day from London Heathrow to both Zurich and Geneva. Swiss offers seven flights a day to London Heathrow from Zurich and four daily flights from Geneva to Heathrow. It also serves London City Airport with regional jets.

The two codeshare on the Basle-London Heathrow route, based on an agreement from the former Crossair - the regional operator from which Swiss emerged in 2002. This operates three times a day using regional jets. The only competition on the route is from low-cost carrier easyJet, which operates from Zurich to London Luton three times a day and London Gatwick twice daily. It also operates Geneva-Luton four times daily and Gatwick three times daily.


Source: Airline Business