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Reuters
UPDATE - Airline Swiss gets US okay after oneworld rebuff
Saturday November 23, 10:02 am ET
By Marcel Michelson
ZURICH, Nov 23 (Reuters) - Swiss International Air Lines, (Zurich:CROZn.S - News), successor to failed Swissair, said on Saturday it had won key U.S. approval towards joining the oneworld alliance -- just a day after it got the cold shoulder from the group''s eight member airlines.

Swiss said in a statement that the U.S. Department of Transportation had given so-called anti-trust immunity for closer cooperation between Swiss and oneworld founding member American Airlines (NYSE:AMR - News), the world''s biggest carrier.
Swiss called the step commercially very important and said it would give the airline an indirect link to the oneworld alliance. Swiss is Europe''s number eight airline in sales terms but has the fourth largest fleet.
Oneworld, however, said on Friday after a meeting in Madrid that it would focus on closer cooperation between partners before opening the door to prospective members such as Swiss.
This is good news that comes on the back of bad news, said Swiss spokesman Jean-Claude Donzel said about the approval.
Oneworld has apparently said that we could not join in the short term but the link with American is going ahead, we have bilateral agreements with the other members and we are convinced that we will be admitted one day, he added.
Swiss and American have been working together since April when the former regional carrier started flying intercontinental routes with two-thirds of the fleet of Swissair and 2.7 billion Swiss francs ($1.83 billion) in public and private money.
With the anti-trust immunity, the two airlines can coordinate ticket prices, flight schedules and marketing.
Flights over the north Atlantic, in the U.S. and in Europe make up half of total world traffic.
The Swiss spokesman could not give financial details and declined to say whether this would be a boost to the airline''s goal of reaching break-even in 2003 and a small profit in 2004.
We had pencilled in the benefits of an alliance as an option and now we can fully take account of that and the earlier we implement it the bigger the benefit, Donzel told Reuters.
MEMBERS FIRST
After a meeting of the alliance members in Madrid on Friday, oneworld''s managing partner Peter Buecking said Swiss would have to cool its heels in the waiting area for some time to come.
Oneworld can bring significant benefits all round by deepening the alliance...not simply widening it, Buecking told a news conference. Adding new members can actually reduce the value existing members enjoy, he added.
Asked if that meant the alliance would not accept any new members, Buecking said: In the short-term that is correct.
Founded by American and British Airways Plc (London:BAY.L - News), oneworld includes Cathay Pacfic (HKSE:0293.HK - News), Iberia (Madrid:ILBA.MC - News), Qantas (Australia:QAN.AX - News), Aer Lingus (AERL.US), LanChile(Santiago:LAN.SN - News) and Finnair (FIA1S.HE).
Membership of one of the three global alliances is important for airlines to offer smooth connecting services and a range of other advantages to passengers. Oneworld competes with Sky Team, led by Air France (Paris:AIRF.PA - News) and Delta (NYSE:DAL - News), and the Star Alliance of Lufthansa (Frankfurt:LHAG.F - News), United (NYSE:UAL - News) and others.
Swiss on Tuesday pruned its fleet and took out eight planes while cutting 300 jobs from total staff of 10,000 in a move to boost earnings by 400 million Swiss francs on the road to break-even in 2003.
It said its loss for the third quarter of 2002 was 135 million francs and its nine month loss stood at 582 million.
The budget foresaw a loss of 1.1 billion for the first year of intercontinental flights by former regional carrier Crossair.
 
IF ONEWORLD is going to be a player in Europe, then SWISS is an important part. STAR has Lufthansa, SAS, BMI and Austrian. SKyteam has AF, Alitalia, and Perhaps KLM. ONEWORLD has only BA abd Finnair. SWISS is located in the heart of Europe, where ONEWORLD lacks any presence. SWISS is a quality airline born, at a lousy time in the industry, plus having to deal with all the factors of lauching a new company. Given the two extra-curricular facts and the daily problems of running an international airline SWISS has done it well, in a swiss way. This s the country that makes Rolex watches and is known for it precsion. SWISS will be run in that precise manner.
 
Could it be that some of the european 1world airlines BA,IB, AY) have a vested interest to keep SWISS out? Regardless, I think AA is going to keep (increase) the code-share with Swiss whether they are a part of 1world or not.
 
I use to be of the opnion that Swiss was a necessary part of One World, not any more. Why? What does Swiss offer? AA has access to Zurich, they can fly to Geneva if their was the market but their isn't. What beyond access does Swiss offer, that One world customers can't receive with connections through LHR? Think about it, AA has rights into a variety of European destinations and the ones they don't, they have Open Skies with.[BR][BR]Where is Swiss going to connect you too? If you were a high paying business executive, after a 6 hour flight, which would you rather connect on an BA 737 or a Crossair RJ?[BR][BR]If you want to fly to Zurich you can do it on AA or connect on BA, Iberia, Aer Lingus or Finair [BR][BR]So let me ask why does Oneworld need Swiss?
 
LHR is constrained, SWISS offers an airport with prime location in the heart of Europe. ZUR has available capacity since SWISS is smaller then Swissair. IB at MAD is to far south, LHR with it access from North America is well located but its infrastructure is not keeping up with FRA, CDG or AMS. SWISS is a quality airline, better then IB, perhaps not quite as good as BA yet, but they are only six months old. Having BA as the big fish and two smaller airlines, IB and Finnair, might serve BA well but not the whole alliance unless you are of the school that says, what is good for BA is good for ONEWORLD. BA's interest is not always the same as ONEWORLD's.
 
Again, I just don't see it.[BR][BR]If I need to fly to Budapest, Athens or Moscow. Why Swiss? How many dailies to LHR vs ZHR? Ever since SwissAir folded up AA has been flying to Zurich(JFK) so their is no problem getting to Switzerland[BR][BR]Remember, it's all about the business traveler. The connections and flight times have to be better out of LHR. Unless you need to start you business in ZHR, if that's the case, AA still code shares with Swiss. They just aren't going to get into Oneworld anytime soon.[BR][BR] IMHO the problem must lie in the Crossair conversion, their still reporting losses and they plan on reducing the fleet even further. Until the press on Swiss gets better and they can prove that they have turned the corner, the other oneworld partners are not going to want to have a BK airline in their alliance.
 
[FONT size=1]I think the fact that we have been given Anti Trust Immunity with Swiss bodes well for their entry into OneWorld.The article stated no new membership in the short term,not a total halt on new members.I'd say short term means the next two or three quarters, while the existing members explore deeper cooperation.[BR][BR]I think Swiss will be welcomed into OneWorld by the end of 2003 at the latest.[BR][BR]OneWorld is in no position to be turning its nose up at potential members,lest Sky Team and Star increase their sizeable lead.[/FONT]
 
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On 11/24/2002 7:54:28 AM JFK777 wrote:

LHR is constrained, SWISS offers an airport with prime location in the heart of Europe. ZUR has available capacity since SWISS is smaller then Swissair. IB at MAD is to far south, LHR with it access from North America is well located but its infrastructure is not keeping up with FRA, CDG or AMS. SWISS is a quality airline, better then IB, perhaps not quite as good as BA yet, but they are only six months old. Having BA as the big fish and two smaller airlines, IB and Finnair, might serve BA well but not the whole alliance unless you are of the school that says, " what is good for BA is good for ONEWORLD." BA's interest is not always the same as ONEWORLD's.
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LHR is in the perfect geographical location for an airline like AA to dump passangers onto BA for their journey in Europe. But, AA doesn't have an extensive codeshare with BA (for now) so it can't do this. Furthermnore, AA flies to LHR from cities that have high O/D, but can't fly to LHR from STL and DFW from where there would probably be more connecting passengers. While Spain is too far south, Finland is too far north and AerLingus has problems, SWISS and Zurich would make a nice semi-central European location for AA passengers to connect on SWISS to smaller (secondary) European cities.
 
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On 11/24/2002 5:19:24 PM FrugalFlyer wrote:

LHR is in the perfect geographical location for an airline like AA to dump passangers onto BA for their journey in Europe. But, AA doesn't have an extensive codeshare with BA (for now) so it can't do this.
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[/blockquote]Sure they can. The cheapest fare codes on AA transatlantic usually exclude flights numbered 6000+, e.g. all code shares. USA-aa-LHR-ba-Continent works for most of these fare codes. You don't need the codeshare, you just have to let folks know that it's ok to purchase an interline fare.
 
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[/blockquote]Sure they can. The cheapest fare codes on AA transatlantic usually exclude flights numbered 6000+, e.g. all code shares. USA-aa-LHR-ba-Continent works for most of these fare codes. You don't need the codeshare, you just have to let folks know that it's ok to purchase an interline fare.

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But isn't the interline fare really the problem? Without ATI, AA/BA can't set through fares to compete with those airlines that can.

Maybe 1world doesn't need Swiss, but BA has been looking for a merger partner on mainland for a couple years. Why doesn’t BA consider Swiss as a merger partner? Wouldn't Zurich provide a good relief for LHR. Increase the higher yielding point-to-point traffic at LHR and send the connecting traffic through Zurich.
 
While the codesharing with AA is a good thing, Swiss needs oneworld a lot more than oneworld needs Swiss.

Swiss has to prove itself in the longhaul business, and they're still not on stable ground financially. Give it a couple years, and they might be in.

AA aside for a moment, there's nothing stopping oneworld carriers from codesharing on BA, AY, and IB into most if not all the destinations that Swiss flies to.
 
AA huge service from the US to Switzerland to fill the void left by SWissAIR is 2 flights. DFW and JFK to ZRH. Before SR went under AA operated the DFW flight so they really added only the JFK service. SWISS flies from the West coast, midwest and the east coast.
 
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On 11/24/2002 11:28:49 PM AirwAr wrote:

Maybe 1world doesn't need Swiss, but BA has been looking for a merger partner on mainland for a couple years. Why doesn’t BA consider Swiss as a merger partner? Wouldn't Zurich provide a good relief for LHR. Increase the higher yielding point-to-point traffic at LHR and send the connecting traffic through Zurich.

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Maybe SWISS needs 1world more than 1world needs SWISS, but I think the addition of SWISS would enhance 1world in a similar manner that CSA Czech Airlines enhances SkyTeam and Austrian/Lauda/Tyrolean enhance Star Alliance.
In essence, DL/AF could do without OK and UA/LH do not really need OS - but the presence of these smaller (niche) carriers enhances the alliance (i.e. the niche of OS is in *alliance is Eastern Europe).
 
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Who's to say that BA will always be a part of OneWorld or even AA for that matter. Wouldn't it be wise to add more members to the alliance so that we don't have just a few airlines to depend on?
 
Not if they are not financially viable. Imagine the news hed line in six months if Swiss does not pull it out.[BR] [BR]One World Partner goes Bankrupt, Again[BR][BR]Lufthansa and Air France have enough on their respective plates. Swiss is going to have to prove that they can add value to the alliance. Try to keep in mind that the alliance differs from a code share with American. Swiss already has that.
 
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