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(Bloomberg) -- Etihad Airways PJSC scaling back in the Swiss travel market, signaled yesterday when local ally Darwin Airline SA slashed routes in the face of heightened competition from Deutsche Lufthansa AG, shows Europe’s leading carriers can repel the advance of Gulf upstarts -- at least in some markets.

Darwin, in which Etihad plans to buy a 33.3 percent stake that would add to holdings in four other European airlines, is cutting four routes from Zurich and Geneva. Darwin blamed tactics deployed by Lufthansa and its Swiss unit for undermining their viability.

The spat shows older airlines aren’t entirely helpless in the face of the Gulf advance, which Lufthansa has said is one of its biggest concerns. Darwin said Lufthansa’s response to its tie-up with Etihad amounts to aggressive tactics, spanning termination of plane-lease deals, fare cuts, a capacity splurge and the withdrawal of insurance terms.

“It’s a symbolic win for Lufthansa as it shows the company is actively fighting the competition and not yielding to the attacks from rivals,” said Per-Ola Hellgren, an analyst at Landesbank Baden-Wuerttemberg is Mainz, Germany. “It’s a small success, good for motivation, but it won’t make a big difference in the long run.”

Lufthansa had no comment. Swiss’s spokeswoman Sonja Ptassek said the carrier would not comment on Darwin’s reproaches as they have been filed with the Swiss competition authorities and a decision on the investment is pending

Traffic Flows

Like Qatar Airways and Emirates of Dubai, Etihad aims to siphon lucrative long-haul traffic between Europe and cities in Asia, Africa and the Middle East via its home hub, aided by feeder traffic from an array of so-called equity alliance partners.

Darwin, rebranded as Etihad Regional, is based in Lugano, Switzerland, and yesterday said it will end four routes from Zurich, Lugano and Geneva from next month, after “predatory competition” and slow economic growth forced the airline out of those markets. It was also unable to start code-share flights with Etihad as the Swiss regulator delayed an “overdue” approval, and said it will increasingly provide contract services for other carriers.

“Swiss and Lufthansa have engaged in a series of abusive actions aimed at forcing us out of the Swiss market,” Darwin Chief Executive Officer Maurizio Merlo said in the statement, ranging from termination of a wet lease contract and insurance policies to “dumping fares” on its routes.

Local Operator

Unlike Etihad’s investments Air Berlin Plc, Alitalia or Aer Lingus Group Plc, which are the No. 1 or No. 2 competitors in their home markets, Darwin limits operations to regional services with a fleet of eight Saab 2000 and four ATR 72-500 turboprops seating 50 and 68, respectively. Etihad had envisioned the carrier to help feed long-haul traffic to its daily long-distance services from Zurich and Geneva to Abu Dhabi.

Lufthansa is under siege by airlines from the Middle East including Emirates and Qatar, which are flying the biggest and most modern aircraft into its main Frankfurt hub, and by ever- expanding low-cost carriers on European routes.

Swiss in November ended a wet lease cooperation with Darwin, switching to Lufthansa’s Austrian subsidiary to increase capacity on its Zurich-Lugano route by 50 percent. The carrier had earlier established a base in Geneva, and said it will start operating Geneva-Lugano 16 times a week.

Emirates in September upgraded one of its triple daily Frankfurt-Dubai flights to an Airbus Group NV A380s, the world’s largest passenger plane, while Qatar this month put an A350, the most modern airliner available, on its Frankfurt-Doha route.

“We chose Frankfurt because sometimes I like to show off my product to airlines that object our entering into their markets,” said Akbar Al Baker, Chief Executive of Qatar.

--With assistance from Deena Kamel Yousef in Dubai.

To contact the reporters on this story: Christopher Jasper in London at cjasper@bloomberg.net; Richard Weiss in Frankfurt at rweiss5@bloomberg.net To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Christopher Jasper

Bloomberg