Swiss regional carrier Crossair has taken a 35 per cent stake in a proposed French startup carrier, in an attempt to improve its access to the European Union market.

Initially, Euro Continental Airways would operate two Crossair Saab 2000s from major French cities to the French sector of the tri-national EuroAirport, serving Basle in Switzerland, Mulhouse in France and Freiburg in Germany. ECA could expand its fleet to as many as 10 Saab 2000s to enable it to link the EuroAirport with EU cities like Lisbon, Milan and Athens.

Backed by Alsace travel companies and a French bank, ECA could potentially fly longhaul routes, though Crossair president Moritz Suter concedes that Swissair, the carrier's 70 per cent shareholder, would approve only if traffic was not diverted from Zürich. A decision on whether to launch ECA should be taken by mid-year, when Switzerland should know the result of its latest bids to negotiate access to the EU's single aviation market.

Suter says EU transport commissioner Neil Kinnock has expressed enthusiasm for a deal with Switzerland, but he has told Suter that two EU transport ministers, presumably those from France and Italy, have said their national carriers would go bankrupt if Switzerland is admitted to the EU aviation market.

While Suter emphasises that Switzerland has liberal bilateral agreements with most EU member states, access to Italy, Portugal and Greece is limited. As an EU carrier, ECA would gain automatic access from the EuroAirport to these markets.

At the same time, Crossair's wish to link all major French cities to the EuroAirport is frustrated by high costs - its French operations are treated as international flights and incur extra landing and passenger fees as a result. The airline estimates that its five daily Basle-Paris flights incur SFr3.5 million (US$2.8 million) in extra costs compared to Air France's operations on the same route.

If a Switzerland-EU agreement is not forthcoming, Crossair could use ECA to solve these problems. But as a non-EU carrier it would still be unable to build up connecting traffic through Basle by offering links from, say, Dresden to Brussels via Basle with the same flight number. The carrier's ability to offer lower tariffs would remain limited.

Suter says that Switzerland's bilateral with Italy was part of the reason for Crossair's decision to cut its weekly seats at Lugano by 32 per cent, close the Rome and Bologna routes and reduce frequencies to Venice, Florence and Naples.

Lack of demand was a key driver - Crossair's Lugano operations have lost $23 million in the last six years. But the Italian government insisted that Crossair reduce its Lugano frequencies after the collapse of a complex side-deal to the bilateral.

Crossair had obtained extra Lugano frequencies alongside Basle-Rome rights, with the latter route to be operated by an Italian carrier on a wet-lease basis. But Crossair has withdrawn from Basle-Rome due to low loads and the $2 million extra cost of operating an Air Dolomiti ATR42 rather than its own aircraft.

This year, Crossair envisages passenger numbers growing 9 per cent to 4.3 million and revenues increasing by 5 per cent to SFr778 million ($630 million). In 1996 net profit jumped 32 per cent to SFr23 million and revenues grew 59 per cent, as Crossair took over the Swissair 100-seat routes and the Balair-CTA short-haul charter operations.


Source: Airline Business