Crash complicates airline re-launch

Crossair's business plan is uncertain swissinfo.ch

The loss of 24 lives in the crash of a Crossair jet couldn't have come at a worst time for an airline striving to become the new Swiss national carrier.

Although the initial focus of Crossair managers will be on the human cost of the accident that occurred late on Saturday, they will be acutely aware of how their response will affect the future viability of the airline.

The initial reaction of the markets was not encouraging: Crossair’s shares opened 11 per cent lower at SFr240 on Monday. However, they recovered some lost ground as the day wore on and closed at SFr255.

Switzerland’s airline industry has been decimated by the collapse of the flagship carrier Swissair in the wake of the September 11 attacks in the United States.

A misguided strategy of foreign expansion racked up debts of around SFr17 billion, leaving Swissair vulnerable to the drop-off in passenger traffic after the attacks on Washington and New York.

Crisis costs jobs

The crisis has cost thousands of jobs and dented Swiss pride. Swissair was always one of the salient symbols of the country’s famous efficiency. When Swissair had to ground its fleet at the beginning of October after running out of cash, the news sent shock waves around the world.

Now, hopes for the future of the Swiss aviation industry rest on Swissair’s former regional subsidiary, Crossair.

In a complicated deal thrashed out among the federal government, cantonal governments, banks and private business, Crossair is supposed to assume two-thirds of Swissair’s operations by spring next year.

But confidence will not be helped by this weekend’s tragedy.

“In some cases in the past, companies suffering a crash have been deeply affected and have even had to go as far as changing their name to restore confidence,” says Pierre Condom of the aviation magazine, Interavia. “But in other cases, the impact has been next to zero. It all depends very much on crisis communication and other factors such as what is responsible for the accident.”

Restoring confidence

Finding out the cause of the crash will be crucial to restoring confidence.

Both the flight data and cockpit voice recorders were recovered soon after the aircraft came down and will be examined for clues to the reason the airline was flying so low on its approach to land.

Although Crossair’s shares opened the week sharply lower, analysts say management will be hoping that’s simply a knee-jerk reaction.

More crucial is the effect on passenger numbers.

“The first impact is on the passengers themselves and what can happen is for passenger confidence to disappear,” says Condom, “And if that happens it doesn’t matter what you do, it’s very hard to build something new.”

But analysts agree that if Crossair manages to hold on to its customers, then investor confidence will follow.

For Crossair, in the middle of a complex transition, it will be of supreme importance to discover the cause of the crash as soon as possible.

Zurich vote

Early next year, the people of Zurich go to the polls to decide whether to invest SFr300 million in the new operation. The outcome will be crucial in persuading other cantons and private investors to take part.

Much will depend on how the Crossair chief, André Dosé, handles the latest crisis.

“I think Crossair is at the moment doing everything that’s necessary,” says Condom, “They are communicating well and Dosé is saying strictly what he has to.”

“The worst thing they could do is to try to hide things and avoid explaining the reasons for the accident. And they also have to explain what measures they will take to avoid problems in the future.”

This is the second Crossair crash in as many years.

In January 2000, a Saab 340 crashed near Zurich shortly after take-off, killing all ten people on board.

Even after that accident, the company kept its reputation as one of the safest and most successful regional airlines in the world.

It remains to be seen if that reputation can survive a second fatal accident.

by Michael Hollingdale