Etihad Regional Partner To Retrench Amid Lufthansa Incursion

 - January 21, 2015, 11:30 AM
Darwin's 14-strong fleet of turboprops includes 10 Saab 2000s. (Photo: Flickr: Creative Commons (BY-SA) by flybyeigenheer)

Less than a month after filing a formal complaint with Switzerland’s competition authority alleging “abusive and anticompetitive” behavior by Lufthansa and its Swiss International subsidiary, Etihad Regional partner Darwin Airline revealed Tuesday that it would cease scheduled flights from Zurich to Lugano and Linz, and from Geneva to Toulouse and Nice in early February. The moves come as the airline prepares to release airplanes for new contract services with other European carriers under a restructuring exercise undertaken in response to both the predatory competition and economic uncertainty. It said it would file a detailed business plan with Switzerland’s Federal Office of Civil Aviation (FOCA) by the end of this month.

Darwin CEO Maurizio Merlo confirmed that the decision to restructure stemmed from both “aggressive behavior” on the part of Lufthansa Group subsidiary Swiss International Airlines and economic malaise in Europe. Meanwhile, Darwin awaits regulatory approval on applications submitted in early 2014 for a series of code shares with Etihad, which last year agreed to take a 33-percent stake in the Swiss regional.

“Europe’s airlines are under continuing pressure as a result of the Eurozone economic crisis and high operating costs,” said Merlo. “Our company faces the added challenges of intense competition from Swiss, supported by its parent, the German airline Lufthansa, and an inability to introduce code-share services pending the overdue approval by FOCA, which would strengthen our operations.

“Although this approval is yet to be granted, Swiss and Lufthansa have engaged in a series of abusive actions aimed at forcing us out of the Swiss market,” he continued.

In a statement released Tuesday, Darwin detailed the alleged predatory behavior, including the termination of a wet lease of aircraft operated by Darwin for Swiss International on the Zurich-Lugano route for almost 10 years. Lufthansa then replaced the Darwin airplanes with larger aircraft flown by Tyrolean Airways, a unit of Lufthansa subsidiary Austrian Airlines.

Other actions Darwin claims Lufthansa took to undermine its position in the Swiss market included launching Swiss International services on Darwin Airline routes, more than doubling capacity on routes where traffic remains static or has declined, “dumping” fares on Darwin routes, terminating all of Darwin’s insurance policies under the Lufthansa Aviation Insurance Group, ending the interline agreement between Darwin and Swiss and cancelling an agreement to assist Darwin passengers in the event of flight disruptions.

Now serving 20 destinations in Europe with eight 50-seat Saab 2000s and four 68-seat ATR 72s, Darwin had planned to unveil an expansion plan by the start of the year centering on a commitment to what Merlo called an “official” aircraft type for the next 10 or 15 years.

Now, it appears the airline has decided to retrench, calling any loss-making campaign to directly compete with Lufthansa Group airlines and Swiss International “imprudent and risky.”

“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,” concluded Merlo.