Darwin Airline to scale back operations
Darwin Airline, the Swiss regional carrier operating under the Etihad Regional brand, will diversify its business model. Etihad Regional will adapt its commercial operations and increase its activity as a provider of contract services; implementing provision of wet lease services (ACMI contracts) to partner carriers within the Etihad Airways Partner group.
In November 2013, Etihad Airways signed an agreement to acquire 33.3% of the Swiss regional carrier Darwin Airline, with 66.7% remaining with local Swiss investors. Along with the investment agreement, which is still subject to regulatory approval, the Lugano-based carrier entered into a number of commercial agreements with its strategic partner, aimed at reinforcing its position as a key carrier connecting secondary European cities; as well as generating significant synergies, both operational and commercial, to develop its network and broaden the reach of the company in its core market.
In a short time span, this partnership drove strong growth in the network, both national and international, and created over 100 new employment opportunities, as a result of the competitive growth strategy, which provided the regional carrier with new passengers and personnel, benefitting the local community.
The Federal Office of Civil Aviation (FOCA), in its position as the civil aviation regulator in Switzerland, is required to ratify such agreements, pending a review of ownership and control. However FOCA, unlike its German and Italian counterparts, has not yet reached a decision on this investment, on which the full implementation of Etihad Regional’s strategy depends.
The Chief Executive of Darwin Airline, Maurizio Merlo, said: “Today’s decision to broaden our business model reflects a long-term vision for Etihad Regional. This will enable the airline to add an ACMI-provider business model, leveraging partner relationships to develop operating synergies across the business. It also ensures a sustainable ownership model, providing benefits to investors, passengers and employees, whilst removing any doubts as to the ownership and control of the airline, which rests firmly with Swiss nationals”.
“We hope that FOCA will finally approve the transaction with Etihad Airways in order to remove the resulting market uncertainty and allow the company to maximize the benefits of its partnership with Etihad, a strong international carrier, and its partner airlines.”
Darwin said the business has also been negatively impacted by the aggressive actions of competitors, Lufthansa and Swiss International Air Lines (the latter a wholly owned subsidiary of the Lufthansa Group). Darwin has lodged a formal complaint with the Swiss Competition Authority as a result of the damage caused by these actions to Darwin’s business.
The new business strategy adopted by Darwin Airline and its need to protect the business’ long term objectives have, unfortunately, affected the company’s personnel.
CEO Maurizio Merlo confirmed: “Redundancy was regrettably inevitable. Our employees demonstrated great solidarity and unwavering commitment to the company. I want to thank them here publicly, as, together we have managed to significantly control the number of layoffs, saving over 30 jobs. This is a considerable reduction from the initially forecasted layoffs, as had been stated in the employee letter addressing the situation.”
“All employees affected by the restructuring have been included in a reallocation plan, and are being fully supported by the airline’s HR department. Where possible, partners will carry out assessments to understand how to best reallocate these employees.”
From today, the airline will cancel several scheduled flights in France and Germany, on all routes directly affected by Swiss International Air Lines’ entry onto these routes. This will allow Etihad Regional to leverage its existing human, aircraft and technical resources to provide ACMI leasing services to other airlines and also partner carriers within the Etihad Airways Partners group.
Etihad Regional will directly contact all affected guests, informing them of their statutory rights under EU regulations (EU 261), ensuring that they are offered suitable alternatives. The company apologizes for any disservice that these cancellations may cause, and has committed to contain as much as possible any impact on passengers.
The Lugano-based airline will continue to operate Swiss domestic routes, as well as flights from Switzerland to Italy, in partnership with Alitalia. It will also guarantee summer connections, particularly from Lugano, in addition to charter operations with relevant tour operators.