Swiss is to demerge its regional operations into a new subsidiary, under the Swiss Express brand, as the year-old start-up battles to ensure its long-term survival.
The new division is to be launched barely a year after the carrier's regional arm Crossair was merged into the mainline fleet. Basle-based Crossair had previously been Europe's largest regional carrier. "They are going back to their roots," says Patrick Schwendimann, financial analyst at Zurich Cantonal Bank.
Details of the new offering, which will be launched in the winter season of this year, are still to be finalised. However, Swiss Express is likely to operate a mixed regional fleet out of Basle, Geneva and Zurich. That will include Saab 2000 turboprops, plus Avro RJs, Embraer 145s and at a later date the Embraer 170/195 regional jet.
Schwendimann says the driving force behind the demerger is the pilots issue. Ever since its launch, Swiss has been hampered by friction between the pilot unions of the former Crossair and Swissair that were merged to form Swiss in early 2002. Crossair pilots have been less than happy with the fact that they are on different contracts to those offered to former Swissair pilots.
Christoph Brützel, consultant with AT Kearney in Düsseldorf, agrees there has been a cultural struggle between the regional and mainline sides of the business. He also points to a mismatch between the regional capacity on offer and the network opportunities offered by Swiss. There is excess capacity on the regional side, he says, and a demerger would eventually allow Swiss Express to feed rival networks.
When it was launched in 2002, Swiss indicated that it was going to be an airline aimed at high-yield passengers. The new concept is a clear departure from that, and signals a further heightening of the battle between low-cost carriers and the traditional airlines. EasyJet, for example, already has a Swiss subsidiary.
Swiss and Lufthansa have held talks, described by the carriers as "routine". Schwendimann says the talks are likely to have looked at options for co-operation on routes between Switzerland and Germany, as well as the possibility of Swiss joining the Star Alliance.
However, Brützel believes that regulatory and cultural issues rule out membership of Star alongside Lufthansa and Austrian Airlines, while SkyTeam would also bring too much overlap with Swiss neighbours Air France and Alitalia. This leaves British Airways and the oneworld alliance as the best fit. BA has been less than convinced about the benefits of bringing Swiss on board, but Brützel predicts it may be interested in using a demerged regional business to provide high-yield traffic to its network.
Source: Airline Business
