Helvetic Airways - Europe for a single price

Helvetic Airways, a new budget airline, has started services to a number of destinations all over Europe out of Zurich. The nicknamed "Barbie Airline" is flying with an interesting concept and a fleet of Fokker 100 aircraft which originate from American Airlines. A report by Michael Meier.

Helvetic is different. And it's not only the eye-catching livery, it's the concept. The airline is selling all tickets at a fixed price. Each one-way flight to any destination is sold for 99 Euros, excluding taxes. A clear pricing strategy with no surprises. And that's quite unusual in the industry of yield management and complex pricing strategies.

Helvetic has quite a similar approach as Germania Express (Gexx) in Germany. Flying Fokker 100s on fixed price tickets. Originally, it was planned to start the airline with Germania as a partner, but the two companies couldn't find a compromise on some terms and the discussions were therefore cancelled. Both parties are now flying on its own.

The concept with a single price for each seat is interesting, and there certainly is a market for such a product. But it will take some time to find out whether the passengers like it. During February, the average load-factors were at about 30%. Load factor numbers of start-up airlines tend to be low during the first months of operation, especially if you beginn flying during the winter time. The numbers are therefore not that bad.

A Fokker 100 after landing. Picture by Helvetic Airways (Martin Fenner, Rolls-Royce)

The summer should look much more promising to the young airline. Naturally, more poeple are travelling during the warmer months. And the airline should also be more known by then.

And beside that, the airline will also start flights for Kuoni, the largest tour operator in Switzerland. Over the summer, Switzerland’s leading tour operator will be using the new airline to fly to eight of its vacation destinations. On Saturdays, helvetic will take Kuoni vacationers to the Greek islands Mykonos, Kos and Santorini, plus Bodrum in southern Turkey. On Sundays there will be flights to the Balearic islands Menorca and Mallorca, Lamezia Terme in Calabria, and Bourgas on the Bulgarian Black Sea coast. In addition to chartering helvetic aircraft, Kuoni has also booked a fixed number of seats for passengers destined for Malaga, Naples, Rome, Venice, Prague, Vienna and Mallorca.

Kuoni is mainly using the capacity in smaller markets, where the number of passengers doesn't justify an Airbus A320 service, which is flown by Kuoni's own airline dependant Edelweiss. The contract with Kuoni is certainly very interesting and important for the young airline as it generates a constant flow of funds.

Full charter flights will be an extension to the existing network with 12 destinations such as Brussels, Vienna, Mallorca, Alicante and many more. Two new destinations - Rome and Naples – will come at the end of March. Until June, Helvetic intends to commence service to two new destinations: Madrid as of May and Amsterdam as of June.

Most of the markets where Helvetic started flying were already covered by other airlines. That's fine for the customer as he gets more choice on these routes but it's a hard job for the airline as the established carriers will try to protect their market shares.

Some of the core routes were already flown by Germania Express, Swiss International Air Lines and other carriers out of Zurich, which are selling tickets to the same airports at lower prices. Let's take two examples, Alicante and Vienna.

Alicante was discussed as a potential market during the negotiations with Germania. Well, the deal was cancelled but Germania took the information back home and is now flying the route for 88 Euros, one way including all taxes. Helvetic Airways flies to the same destination at a price of 99 Euros one way, but taxes will still be added. That gives you a price of 229 Euros for a complete trip. Quite a difference to Germania's 176 Euros, right?

On the route to Vienna, the airline is in competition with Swiss and Austrian Airlines. The picture is quite similar here. Helvetic is the most expensive, if we look at the cheapest available fare. But if you book late or if the plane is almost full, a ticket on Swiss or Austrian could also cost you more than 1000 Euros. You will never have such a surprise on Helvetic. And that's a big pro.

Leisure travellers tend to book the best available fare. So the first ones will probably not book their ticket at Helvetic. But as soon as the competitors sold all their cheaper tickets, people will go to Helvetic. As long as the market is big enough to support more than one airline, the concept will work fine. But if it get's tight, it will be interesting to see what happens. Other carries may likely lower their fares even further to defend their market share. But Helvetic said that they will not respond to a possible price war. 99 Euros it the price, there are no exceptions.

A Fokker 100 in the Alps. (Picture: Helvetic Airways)

Background

Helvetic Airways is owned by Odette AG and some individual entrepreneurs. Odette AG is a private company based in Switzerland with a wide range of different businesses. And the company is not new to the aviation industry. Odette is already flying charters to the former Yugoslavia area with an MD-83 aircraft. And even after the Helvetic launch, those flights will still be operated with the established brand name Odette Airways.

Helvetic Airways intends to lease up to 11 Fokker 100 aircraft to serve destinations all over Europe from the main base in Zurich. Three planes are currently in service. As mentioned before, the aircraft were previously flying for American Airlines in the USA. The main reason why Helvetic Airways has picked these birds was the price. The planes were really cheap to get. Currently, there are so many Fokker 100s on the market, it's easy to get a good deal on them. And they're getting quite popular with low cost airlines now. Beside Helvetic and Germania, the Canadian carrier JetsGo has also placed an order for some second-hand Fokkers now.

Prior to entering service with Helvetic, the Fokkers make a stop in England, where they're getting a new interior and a complete c-check at BMI's technical department. Beside that, the planes are equiped with new, more powerful Rolls Royce engines. Once in service, SR Technics will take care of the line maintenance in Zurich.

In the first 100 days from the start, Helvetic Airways has carried a total of 44,000 passengers on 920 flights. According to Thomas Frischknecht, Helvetic's Chief Commercial Officer, the airline needs a load factor around 50% to break even, and that should really be possible once after some time. The airline is certainly offering an attractive product and it will be interesting to follow their way.

Michael Meier

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