Swiss World Flies Against Tradition New Airline Plans Launch With Clever Marketing Strategies

World Airline News, August 28, 1998

Swiss World Airways is rallying for a Sept. 10 launch with

service that breaks new ground in airline marketing and operations.

Its frequent flyer program is a scratch-off ticket that instantly

rewards passengers for flying on the new carrier; its service,

competing against top-rated Swissair, will be pay-as-you-go; and its

fleet eventually will be all 737-700ERs for trans-Atlantic flights.

But things are far from clear sailing for the Swiss startup. For

starters, its application to begin service to the U.S. still is

pending at the DOT, so with only two weeks to go before its

anticipated start date, flights still are not advertised or listed in

any reservations system. Also, although the U.S. and Switzerland have

an open skies agreement, Swiss law prohibits two Swiss airlines from

competing on the same route. As a result, Swiss World will not be

allowed to serve the Basel-Newark route.

Finally, the carrier has hired New York-based Tool Box as

its

advertising agency, but the U.S. company has no prior experience with

airlines. Its marketing message will focus on its lower costs, but

whether or not it can hold its own against Swissair with that message

remains to be seen.

Swiss World, based in Geneva, plans to tap into what it sees as

a "small, high-yield market with a lot of demand for a lot of

different destinations," said Daniel Schenk, SWA's director of

marketing. Its first route will be Geneva-Newark, which it will fly

with a 767-200ER configured into 10 first class ("Premiere"), 30

business class ("Affaire") and 159 coach class ("Eco-Plus") seats. It

is leasing the 767 for two years from Ansett.

The carrier will take on a second plane, a 757, in November

which it will use through the winter season. On Aug. 19, Swiss World

signed a contract to lease four 737-700ERs, two of which will arrive

in February, one in March and one in April 1999. Ultimately, the

startup airline will have an all-737-700ER fleet.

Although no other airline uses 737s on trans-Atlantic flights,

Schenk explained the 737 is ideal for Swiss World's plan to fly point-

to-point from small markets, avoiding large hubs.

Once new planes are added, SWA will add Geneva-Washington and

Geneva-Montreal to its network. It also hopes to add Basel-Newark, but

since Swissair plans to fly that route beginning in December, under

Swiss law, SWA would not be allowed to fly it until 2008.

Further Expansions Planned

The Swiss World scratch off card, said CEO Peter Leishman, is "a

little bit of fun and a little bit of luck."

Swiss World is working with Boeing [BA] on a new version of the

737-700ER to increase the gross weight and give the aircraft even

longer range than its current 3,300nm. With an IGW 737-700, SWA will

take a hard look at routes to the Middle East, Asia and northern

Africa, as well as additional trans-Atlantic destinations, said Peter

Leishman, CEO of Swiss World. In the future, officials will evaluate

flying out of Zurich, although he emphasized that the carrier is not

interested in flying intra-European routes.

The carrier is also not interested in codesharing or interlining

with other airlines. Instead, it is banking on some new ideas in

incentive programs and in-flight service to help lure passengers. "The

scratch ticket may work," said Rob Mark, a marketing consultant and

principle with Mark Communications in Chicago. "It's very tough to be

innovative in the airline industry. This is a pretty interesting idea,

though. To have someone in line scratch off a ticket and win a free

trip or something and get excited about it - that kind of enthusiasm

is infectious."

Swiss World also is banking on its prices. Economy class tickets

range from $167 to $530 one way. Business class and first class

tickets are equally low - ranging from $667-$1,000 and $1,267-$2,000,

respectively.

But the decision not to cooperate with other carriers raises the

question as to whether or not Swiss World can survive. It is based in

a city of roughly 460,000 people, and although the catchment area

outside Geneva is relatively large, it may not be enough to provide

adequate traffic for the carrier to survive without feed from another

airline.

Although it will not codeshare, Swiss World has signed other

contracts with several companies: British Airways will do its

maintenance in Geneva; LSG SkyChefs will do inbound catering and Gate

Gourmet will do the outbound catering. It also has signed an agreement

with Swissport for ground handling in Geneva and AMR Corp. [AMR] for

other ground handling. Its reservations are on the SABRE system.

>>Schenk, +42 22 717 8575; Mark, 773/685-1006<<

The Swiss World Game Plan

Swiss World Airways has some unique plans for its frequent flyer

program and in-flight service:

Frequent Flyer Program: Frustrated with traditional programs

where customers spend months or years accumulating miles, Swiss World

will have an instant-gratification program. On a passenger's first

one-way flight, he submits his name, address, etc. and receives a

frequent flyer card. On his second one-way flight, he produces the

card at check-in and receives a scratch-off ticket. Every ticket is a