Etihad Airways (EY, Abu Dhabi International) president and CEO James Hogan has reiterated his airline's commitment to partnering Darwin Airline (Lugano) in the wake of the Swiss carrier's official announcement of a dramatic restructuring of its operations yesterday. Despite making a series of concessions to satisfy both Swiss and European regulatory concerns, Darwin has yet to secure the official greenlight to sell a 33.3% stake to Etihad Airways. The persistent delays in implementing the acquisition has lead to some Swiss and German media speculation that the Emiratis could withdraw from the project completely.
"Our commitment to work with Darwin Airline remains strong and will not be compromised by the aggressive actions of competitors," Hogan told the international media.
Darwin Airline CEO Maurizio Merlo yesterday announced that as a result of rival Swiss' "aggressive" market drive and the continued economic malaise in Europe, his airline, also known as Etihad Regional, would be terminating four loss-making routes - Lugano-Zurich, Zurich-Linz Blue Danube, Geneva-Toulouse Blagnac, and Geneva-Nice - from February onwards in order to enhance its presence in the European charter/ACMI market. Darwin Airline is also awaiting regulatory approval from Switzerland’s Federal Office of Civil Aviation (FOCA) for a series of codeshares which were sought early in 2014 with Etihad Airways.
“Europe’s airlines are under continuing pressure as a result of the Eurozone economic crisis and high operating costs,” Merlo said. “Our company faces the added challenges of intense competition from Swiss, supported by its parent, the German airline Lufthansa (LH, Frankfurt International), and an inability to introduce codeshare services pending the overdue approval by FOCA, which would strengthen our operations.”
Darwin filed a formal complaint with Switzerland’s Competition Authority (Schweizer Wettbewerbskomission) alleging abusive and anti-competitive behaviour on the part of both Swiss and Lufthansa, which began after the announcement of Darwin's proposed tie-up with Etihad.
Among its claims, Darwin alleges that Swiss, in a bid to drive Darwin out of the market, has resorted to either fare dumping on Darwin-operated routes, or capacity dumping on routes where traffic is either stagnant or declining. Swiss also replaced Darwin's Saab 2000s with Dash 8-400s sourced from Lufthansa Group affiliate, Tyrolean Airways (Innsbruck), on its Lugano to Zurich routes.
As such, Merlo said his airline believed it to be imprudent and risky to continue in a loss-making battle with Swiss and other Lufthansa Group airlines. “We have done what any sensible and responsible company would do, and opted to change course instead of persisting in a fight we cannot win,” he said.
The Lufthansa Group along with other European main line carriers such as Air France-KLM Royal Dutch Airlines have expressed strong reservations about the Gulf carriers encroachment into both the European regional and international markets. They claim that in contrast to stringent European Commission (EC) rules forbidding direct state intervention in local carriers, Gulf-based carriers such as Etihad, Emirates, and Qatar Airways are strongly supported by their respective governments through indirect subsidies thereby giving them and their affiliate carriers an unfair competitive advantage.
