New Swiss airline SkyWork aims for “metro-capital” airport success

Tiny Switzerland has another airline, this one based in Bern, the nation’s capital and fourth largest city. Given that both Zurich and Geneva, the most populous, are small by global standards, basing an airline in a metro area with only 350,000 inhabitants may be a risky, and previously unsuccessful, endeavour. However, that history has not prevented yet another attempt named SkyWork.

Problem number 1, access

The project is further clouded by the fact that Switzerland’s three other airports, Zurich, Geneva and Basel, have frequent, direct rail inks to the nation as well as other points in Europe. The journey from Bern Main Station to Zurich Airport operates twice each hour and takes just over an hour. In contrast, Bern Airport has a lone bus service from that same terminus that operates on a rather erratic schedule and takes about 25 minutes.

Bern’s airport is located just southeast of the central city in a village called Belp. Prior to the rail ink to ZRH, there were infrequent flights to other Swiss airports. Once those passengers could travel directly by rail, Swissair’s subsidiary, Crossair, operated very minimal service to a few, select, European cities. While there have been numerous attempts to create a more robust schedule, up until now none has succeeded.

In recent years, Lufthansa’s partner, Cirrus, has operated the most flights, connecting BRN to the LH network via Munich. The airport is also served by Air France as well as Swiss and European charter airlines.

Another try with a different business plan

But there is now a far more serious attempt to make Bern a “metro-capital” airport as it is described by the new carrier’s CEO, Tomislav Lang. He is a thirty-something entrepreneur with a lifetime of airline experience, money from heirs at Rolex, and boundless enthusiasm.

His airline, SkyWork, has been around for a quarter of a century as an air taxi service but was essentially bankrupt at the end of 2010 when new investors approved a business plan that envisions direct service from BRN to as many as 24 European points.

He believes that what is missing at “metro” airports across Europe is frequency and good service which has discouraged patronage and failed to divert travelers from hubs. With SkyWork, he intends to bring both benefits to passengers boarding at BRN, along with travel via an uncrowded facility.

When asked about passenger service, Lang describes the airline as a cross between an LCC and a legacy carrier. SkyWork provides every passenger with free water and a small meal at no additional cost. However, other drinks and snacks are available for purchase should the passenger desire additional items. The food is supplied by a local Bern caterer, Bon App. IFE is provided by iPads carried on each aircraft and available to passengers—an interesting and novel approach.

Accelerated development, growing network

The airline will soon have an unprecedented 12 destinations in its network and hopes to grow that number to the planned 24 over the next year, leading to an expected break-even operation by 2013. By having a robust schedule, Lang believes that the appeal of a smaller, local airport will be greatly enhanced. To ensure schedule integrity, his planning also includes one full-time spare aircraft, available for replacement at all times, even though utilisation is greatly impacted.

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The current summer flight schedule at BRN is shown in the chart and flown by all carriers with turboprop aircraft: SkyWork with a mixed fleet of Dornier 328s and Bombardier Dash 8s. Cirrus flies Dorniers as well, and Air France operates ATRs.

SkyWork’s 328s have 31 seats and the Dash 8s, 72. For the summer 2011 schedule, the airline operates two of each type, with one of the 4 aircraft always held in reserve.

One Dornier is in for C-check and another Dash 8 is awaiting pickup in Toronto. By the end of 2011, the fleet will consist of six aircraft - three of each type. Next in line for service are Budapest, Belgrade and Madrid. Maintenance is outsourced; the Dash 8s to Augsburg Airways and the Dorniers to RUAG.

In describing the future, Lang was eager to highlight the progress already made. The carrier, in roughly half a year, has grown to 110 employees and has a growth rate with the European Regions Airlines Association of 1925%, a number that will catch anyone’s attention.

An expensive base airport and fledgling brand

While the airline has not been unduly affected by rising fuel prices due to its turboprop fleet, Lang noted that its most worrysome fixed cost is the operation at Bern, where the airport has yet to assist the carrier by offering favourable charges. When asked why, he observed that scheduled operations at BRN have had a checkered history and that the airport is probably trying to protect its income stream. It is also the only private commercial airport in Switzerland. Nonetheless, he hopes for a more favourable arrangement as SkyWork grows.

Next, he envisions one aircraft based by summer 2012 at Lugano, in Switzerland’s Italian Ticino region, another small Swiss airport but with a much longer rail connection to either Zurich or Geneva. Lugano currently has airlinks to both Swiss airports but few other services.

Sales and name recognition are the principal challenges at this time. While difficult to accurately determine, the carrier believes its catchment area to be about 1.9 million and 10% of the airline’s budget is dedicated to promotion to raise its brand awareness.

The airline currently offers 20% of its seats at CHF79 (USD100), a promotional fare designed to bring passengers rather than profits. Revenue management is also outsourced. But the normal fares are priced well below those offered by Cirrus and Air France for point-to-point travel.

Most of the airline’s traffic is currently composed of leisure travelers and it is a sales goal to increase the contingent of business travelers headed for Bern or its environs, allowing them to bypass the size and complexity of ZRH.

In 2010 it gained representation in the GDSs and the carrier has a fully functional website for passenger booking and information, as well as web check-in. According to Lang, the number 1 nation for web-clicks is Switzerland, followed by Germany and, interestingly, the US at number 3.

C-series too costly

When asked about fleet plans, Lang sees the new C-series as the perfect aircraft for an operation like SkyWork but has decided that its cost is too high to justify purchase. With a high acquisition cost, the operating economics are undone and he plans to stick with the turboprops for the near term. The dream is to eventually acquire A320neos for SkyWork’s network. They will bring good operating numbers and, because they are ubiquitous in Europe, maintenance and handling are easily arranged.

Lang is a Croatian, but born abroad as his father worked for JAT, instilling in him a love of the industry at an early age. He admits that his formal training in management is limited but believes that his grasp of the essentials as well as the willingness to build an enthusiastic and motivated team will bring success to SkyWork.

On his list for growth are more distant points like Stockholm, Helsinki, Moscow and Istanbul—all reachable with the 1400-m runway at BRN. As mentioned earlier, SkyWork's goal for BRN is 24 network stations along with a smaller group at Lugano. Once that is achieved, the concept will be taken “on the road” with operations from points in Germany next on the list.

Looking even longer term, he would like to also take the operational model to Croatia, a place to which he one day hopes to return. And his ultimate personal goal?—to be the youngest president of Croatia!

With that kind of ambition at its helm, it might be advantageous to keep an eye on SkyWork as it develops.

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