First of all, being a Belgian (and certainly with a login name like mine) I know how easy it is to think I act out of revenge, yet I would like to state I have no joy whatsoever in seeing Swiss slowly sinking deeper in the mud every day....
This being said, I can't say all this news comes as a surprise to me: after all, SWISS was oversized right from the start.
I know some will say Swissair was even bigger and was once highly profitable, yet you have to remember SWISS is not Swissair. During the last years of SR
and even more now, European skies suffer from overcapacity, so in fact the bankruptcy of SR
(1) -even if caused mainly by managerial failures I have to admit- should have been a clear signal simply refunding and rebranding the 2 defunct carriers would not do the trick.
Although the Hunter Strategy, which made SR
take significant stakes in Sabena, AOM and other airlines in Europe certainly increased the cash drain in Zurich, fact remains that SR
(the airline operations I mean, so without all its airline related business) wasn't profitable either for the last few years of its existence. However, for one reason or the other, most Swiss actually believed SR
ultimately went belly up because of its foreign participations and commitments to loss making airlines like Sabena, AOM, Air Lib etc. rather than its own managerial network mistakes. Thus the idea any new-SR without these deadweights at its feet would do well again, was born and LX
Facts so far have proved this to be a completely wrong strategy.
Rather than continuously announcing new network cuts, accept and then refuse membership of OneWorld, have constant changes in management and in-flight service concepts (basically each time a new devastating financial report has to be published), LX
should for once and for all make up its mind what kind of airline they want to become and stick to that. No matter what decision they take, it would certainly save them a lot of money and at least allow the company to gain some momentum, something it lacks so far.
I have said it before and at the risk of being called an idiot and whatever else you can imagine I will say it again, LX
in my view has to shape itself in a kind of SN
look-a-like with 3 basic pillars:
1) regional operations:
thanks to the geographic situation, traveling around in Switzerland can take quite a lot of time unless done by air, so this opens up some opportunities for selected regional flights from regional Swiss airports like Basel and Lugano... Mind you: regional flights mean short haul, so there is no need to start dreaming of BSL
flights like in the past. BSL
for instance would be the foremost limit.
2) European operations:
these can run from GVA
. However, care has to be undertaken not to build a second hub in GVA
, competing with the main hub operations in ZRH
, so only profitable point-to-point links would be acceptable from GVA
. What destinations are served, I really can not say: LX
should have to carefully study their pax revenue to see if for instance a GVA
flight makes sense or not; If it does, keep it; if not, drop it asap. It would probably lead LX
to operate only a handful of destinations itself. For the rest, LX
may have codeshares to the other places, rather than compete against IB
for instance on that MAD
3) Intercontinental operations:
This is where most cuts should be made. They should stick with high yield routes only even if it means dropping some prestigious routes. Since the local Swiss market is too small to support daily intercontinental flights, LX
has to set on transfer pax too to make their long haul flights profitable. Obviously, there is no gain from trying to compete against network carriers like BA
with multiple daily flights to very common places LX
serves only daily at best: you will never be able to attract time sensitive (and high yield) customers and will be stuck with the low fare transfer pax, thus making it virtually impossible to run these flights profitable (especially from a country with such high labour costs like Switzerland). LX
should take an example at TP
and turn itself into a niche long haul specialist (TP for Brazil, SN
for Central and West Africa) rather than try to serve a few cities on each continent with not too good frequencies like they are doing now. This would allow them to have higher ticket fares, be able to more easily attract transfer pax, and get away with less convenient flight schedules. Of course, finding a niche market is about the most difficult thing there is in any business and I really doubt there is one left for LX
, but I hope so, since otherwise their long haul operations are doomed and thus ultimately the airline itself.
[Edited 2004-08-02 10:44:34]