F
R

4
-
2
0
0
2

"SWISSAIR WITHOUT THE AIR”

For the Swiss people, virtually no issue is as emotionally charged as the fate of "their” airline and the question of whether and how things can continue following the catastrophic demise of Swissair. A total of 4.2 billion Swiss francs (some 2.8 billion Euro) of fresh capital has ensured that flying operations continued uninterrupted to the re-launch and that the new company will be financially secure. The government in Bern and virtually all the cantons have together raised over a billion francs of funding, the rest being spread among banks, large companies and private investors.

When André Dosé officially disclosed the secret of the new name in an exhibition hall in Basle, there was complete silence for almost half a minute and not a hand stirred to applaud. The company's future name is much too down-to-earth to inspire a storm of enthusiasm and disappointingly simplistic, given its celebrated inventor. Tyler Brûlé, 32-year old design guru from Canada and now resident in London, and his creative company were selected from a shortlist of seven agencies. The self-professed fan of Switzerland is relying entirely on the strength of the Swiss national colours. "The design should express elegance and understatement, we don't want to be trendy,” says Brûlé. "We want to bring the nation together again with the four languages of the brand.”

Only four months after Swissair was forcibly grounded and the future of Swiss aviation appeared uncertain, the course has been largely set for the future. Under its old name Swissair will continue flying its longhaul flight schedule trimmed back by 30% plus some European routes to the end of March, with government assistance. At Zurich airport up to 25 Swissair jet out of the former fleet of 76 aircraft have been standing idle for some months, among them ten Airbus A321's, three A330's and five MD-11's which will not be transferred to the new carrier's future fleet either. The new Swiss concept envisages adding 26 medium-range jets from the A320 family and 26 longhaul jets (13 A330's and 13 MD-11's) which previously belonged to Swissair to the Crossair fleet. In the summer of 2002 Swiss plans to operate a total of 128 aircraft. Many short- and medium-range routes and all the German routes were taken over by Crossair back in the autumn of 2001.

On 1 April the new company will take off under the name of Swiss, but only after the annual general meeting in May can the future legal designation, Swiss Air Lines Ltd, be introduced.

An investigation into whether this name, which was used between the 1930s and 1950s by the later Swissair, will bring any legal problems with it is still under way. Distancing itself from the old Swissair and its almost 17 billion Swiss francs of debt as a completely new business start-up, both outwardly and legally, is not just a matter of positioning for the new company but also essential to its survival. However, it will take until well into next year before the complete change of corporate image is visible to passengers. Six to eight aircraft, two of each of the existing types, are to carry the new colours from April, and by the end of 2002 all the aircraft should have been repainted in a concerted drive. By the end of the year the signs at all the airports served by Swiss around the world should have undergone a makeover, but modification of the lounges, the introduction of new uniforms and the planned redesign of the cabins will take until at least the end of 2003. The re-branding exercise alone will cost 70-80 million francs (some 55 million Euro) and, including advertising, re-naming the airline and repositioning the brand will have devoured over 100 million francs. "It is a lot of money but well worth it,” says Arjen Pen, director of marketing at Swiss.

Swiss's route network is virtually identical to the destinations flown during the winter months by Swissair and Crossair and will include another 85 destination in 34 countries. Since October 2001, services to 21 destinations in 18 countries have been discontinued, including longhaul routes to Abidjan, Atlanta, Beirut, Ho Chi Minh City, Osaka, San Francisco, Santiago de Chile, Shanghai and Taipei plus twelve European destinations. "These cutbacks will remain in force”, says Arjen Pen, "but whereas up to now Swissair and Crossair flew independently of each other, from April we will have integrated rotations.” This will result in significant improvements on services to 15 destinations. Thus, for example, Moscow will in future enjoy a twice daily service from Zurich. "Initially we will fly all the services under LX flight numbers, but we have applied for a new code for next winter.”

André Dosé, the man who only a year ago was the head of Flight Operations at Crossair and has now risen to become the employer of a workforce that currently numbers 8,900, now has to "solve a lot of major problems” in record time, as he puts it himself. One of the most difficult of these is to get the former pilots of Crossair and Swissair, who are not exactly on good terms with each other, to agree to a collective agreement and then to establish a new salary structure and seniority. Some 850 pilots from the former Swissair are now joining 1,050 Crossair pilots, 340 pilots at the collapsed airline having lost their jobs. The remaining ex-Swissair pilots will have to accept significant salary cuts: a Crossair captain with 12 years of service earned no more than 118,000 francs (roughly 80,000 Euro) per annum, approximately 35% less than his Swissair colleagues. For 2003 the management is planning a rise to nearly 124,000 francs, and after 20 years of service the maximum salary from next year will be 145,000 francs (about 100,000 Euro).

Crossair's low costs are the biggest weapon in André Dosé's armoury, the key to making a success of the new carrier. How long he can keep them at the level of a regional airline when the new company is in fact an intercontinental airline will be critical to Swiss's market prospects. Dosé is setting his sights high: 9.8 million passengers are expected in 2002, but the business plan envisages an ambitious 15 million passengers for 2003. "Then we plan to be the fourth biggest airline in Europe,” says Dosé. Swissair recorded just under 20 million passengers for the year 2000, albeit with a workforce of 72,000. Swiss is aiming for a 40% market share in Switzerland in 2003, with 6.6% of the market in Europe and 2.1% world-wide. Financial experts are already saying that the objective of breaking even already in 2003 and of making a profit in 2004 is unrealistic. Others doubt whether it is really possible to maintain cost leadership in the industry while at the same time offering passengers the highest quality, "perfect service” or "the best First Class in the world”, as Dosé is promising.

Whether it proves possible, as promised, to have an alliance partner in place in time for the summer flight schedule after the former Qualiflyer group has been virtually disbanded and only its frequent flyer programme remains, will be critical. In the present situation this is difficult to imagine when the only alliance that made sense, with Oneworld, has already turned Swiss down. The biggest drawback to all potential partners is the size of the Swiss route network and the importance that the airline attaches to Zurich as a hub for longhaul connections. Swiss is committed to its operational home base of Zurich (its administration will be divided in future between Zurich and Basle) since Swiss voters have approved a 350 million francs stake in Swiss's capital by the city and canton. On the other hand a hub in Zurich is not convenient either to SkyTeam or the Star Alliance. The Lufthansa Board of Management was already talking of "declaring war” if Swiss really planned to operate 26 longhaul jets when its domestic market is only 7 million Swiss. After retiring its Boeing 747-200's, Lufthansa currently has 65 longhaul jets in its fleet, with a home market more than 11 times bigger than the new Swiss carrier's, and to provide a comparable intensity of service, it would have to fly up to 300 intercontinental jets. "The company has never been prepared to mentally admit the possibility of contracting to a size appropriate to the home market,” writes the Swiss journalist René Lüchinger in his informative book, "The case of Swissair”. His colleague Sepp Moser, also an author and critic of Swissair, does not view Swiss as a genuine new start-up. "This is Swissair without the Air, the people in charge and the megalomania are just the same as ever.”

Unimpressed by this criticism, on top of all the other problems Swiss has also saddled itself with a decision about a new longhaul type which is to be announced as early as April. "We plan to replace the MD-11 in two years' time at the latest and we are looking for 13 Boeing 777's or Airbus A340's as a replacement. We haven't yet made up our minds,” says André Dosé. Deliveries of the chosen model are to commence in October 2002. Perhaps the A340-600, of which Swissair had nine on order at the time of its collapse, will then enter service on ultra-long routes in Switzerland after all.

From page 30 of FLUG REVUE 4/2002
 

"Quality and cost consciousness are not a contradiction”