Darwin restructures ops in response to “predatory competition”

Darwin Airline, which operates as Etihad Regional, is to restructure its operations to increase its activity as a provider of contract services for other carriers in Europe and will submit a detailed business plan along these lines with Switzerland’s Federal Office of Civil Aviation (FOCA) by the end of January.

Although it will continue to operate scheduled flights, the airline has decided to close four lossmaking routes in order to release aircraft for contract operations.

From the beginning of February, Darwin Airline will cease scheduled flights on the Lugano–Zurich, Zurich–Linz, Geneva–Toulouse and Geneva–Nice routes. Passengers booked on affected flights are being advised of the cancellations, and offered either alternative flights or full refunds.

Darwin’s chief executive, Maurizio Merlo, said the decision to restructure reflected the “aggressive behaviour of Swiss International Air Lines and continued economic malaise in Europe”. The company is also awaiting regulatory approval of a series of codeshare routes which were sought early in 2014 with its equity partner Etihad Airways.

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

Darwin Airline recently lodged a formal complaint with Switzerland’s Competition Authority, Schweizer Wettbewerbskomission, alleging abusive and anti-competitive behaviour by SWISS and Lufthansa.

In late 2013, Darwin Airline announced that it would rebrand as Etihad Regional, under a commercial agreement with Etihad Airways. Early last year an agreement was concluded through which Etihad Airways would acquire a 33.3% stake in Darwin, subject to regulatory approval.

“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,” claimed Merlo.

Darwin states such actions included: terminating the wet lease by SWISS of Darwin Airline aircraft, operated on behalf of SWISS on the Zurich–Lugano route for almost 10 years; replacing Darwin Airline aircraft with larger aircraft from Tyrolean Airways, a wholly-owned subsidiary of Austrian Airlines, another Lufthansa subsidiary; launching services on Darwin Airline routes, many not previously operated by SWISS; more than doubling capacity on routes where Darwin believes traffic is either stagnant or declining; dumping fares on Darwin Airline routes in order to drive Darwin off these routes; termination by Lufthansa of all of Darwin Airlines’ insurance policies under the Lufthansa Aviation Insurance Group, increasing Darwin’s insurance costs; termination of a standard interline agreement between Darwin Airline and SWISS, enabling passengers and their baggage to connect between airlines; and cancellation of an agreement to assist Darwin passengers during flight disruptions.

Merlo said Darwin Airline believed it to be imprudent and risky to continue in a lossmaking 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 confirmed.

“We apologise for the inconvenience this will cause to our passengers, and the impact on the communities impacted by this decision. We will continue to offer Swiss consumers services on the remaining routes in Switzerland and hope that FOCA will now approve the transaction with Etihad in order to remove the market uncertainty and allow us to maximise the benefits of our partnership. We are also working with the competition authority to prevent further damage to our business from SWISS and Lufthansa,” Merlo added.

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