SWISS in codeshare talks with Singapore Airlines as SIN-ZRH dailies loom

Issues & Trends – March 2013

SWISS in codeshare talks with Singapore Airlines as SIN-ZRH dailies loom

SWISS International’s Arved von zur Muehlen, is expecting a big response from the Australian market when his airline begins daily non-stop flights from Singapore to Zurich on May 13.

During a visit to Australia and New Zealand earlier this month SWISS’ newly appointed managing director intercontinental markets told travelBulletin that the airline has ear-marked Australia as one of the top three sources for the 218 seats that will be available each day on the A340 aircraft it will deploy on the route.

Pleased with reaction to the new service from the Australian travel industry, he expressed “great confidence” that it will generate considerable passenger feed, although at this stage there is no codeshare arrangement with a carrier flying from Australia to Singapore.

Talks on a codeshare are under way with SWISS’ Star Alliance partner Singapore Airlines, von zur Muehlen revealed, adding that his airline also enjoys excellent relationships with Qantas.

He acknowledged challenges such as the diversion of Qantas European services away from Singapore to the emerging hub of Dubai and the threat to Australia-Europe fares yield posed by increased capacity.

The yield threat to Europe fares has most recently been demonstrated by the $1440 fare released by China Southern for its services over Guangzhou.

But these developments have not shaken von zur Muehlen’s faith in the ability of SWISS to operate with high and profitable load factors on the route.

On the impact of the Qantas-Emirates alliance, he said: “It’s always the talk of the town when two big players join forces and I will be curious to see the first effects which will become evident in the summer.

“But I would differentiate between the potential effects on the overall market and the impact it could have on SWISS.

“We will be offering 218 seats on our one A340 flight a day; that’s very different from operating two or three A380s per day.”

He is similarly optimistic that SWISS can hold the line on yield for the relatively small capacity it is operating.

Commenting on the China Southern initiative, von zur Muehlen said:“Yes, it is a concern but this is not new.

“We often see new entrants offer cheap fares.

“Their brand is not well known and so they come in and sell on price and there is no doubt they attract a certain price-sensitive clientele.”

However, he claimed, SWISS was last year able to increase yield across its network while achieving 83 per cent load factors – despite the strength of Switzerland’s currency.

He attributed this to a large extent to the power of the SWISS brand combined with “excellent revenue management systems”.
“I don’t want to stretch it too much,” he said. “Price and flying time are key drivers of the choices passengers make but a strong brand can command a premium. SWISS has a high reputation and feedback indicates we are well positioned (to maintain fares yield).”

SWISS, of course, operates from two mainland China gateways – Beijing and Shanghai – as well as Hong Kong.

Asked about the feed from Australia to these services, von zur Muehlen said: “It is a minor role but we have seen a slight increase.”

He identified drivers of Australian traffic to Europe over mainland China gateways as connectivity (“the timing of flight connections has to work”); the transfer product at China airports; and airports’ retail experience.

He said the transfer product used to be very poor but is today “much improved”.

While airport retail experience can be a factor in decisions, von zur Muehlen doubted it would be a major one for price-sensitive passengers. “If the price is right I don’t think Australians will have anything against Chinese airports,” he said.

While von zur Muehlen was in Australia, SWISS announced that its Airbus A340 fleet will be phased out and replaced by B777s from 2016 onwards.

He described this as “a strong decision underlining our belief that we have a strong future”.

He has no doubt that the carrier will build the Singapore-Zurich market to a point where it can fill the additional 100 seats a day that B777 services will bring to the route.


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