THE SKEPTIC: Let Market Finish Off The Useless Airlines

By DENNIS BAKER

A DOW JONES NEWSWIRES COLUMN
ZURICH -- Terrorism and war and now SARS disease are making life tough for some of the encrusted airlines.

Too bad.

Who needs these old dinosaurs anyway? If Pan Am and TWA can fade away with hardly a whimper, how about letting some others join them?

Forget the bailouts, subsidies and any other form of government aid for these airlines in descent. It's a waste of taxpayers' money.

Take this thing called Swiss (Z.SWI), a multi-billion-franc bottomless pit, pretending to be an airline, but hardly a going concern.

Switzerland's proud yet downtrodden government and business leaders wanted Swiss to be a replacement for the beloved Swissair , the victim of poor management decisions of the 1990s.

But all Swiss has become is an instant relic of long-disgraced government forays into private enterprise. Forget it.

A newspaper report this weekend claimed Germany's Lufthansa (G.LHA) might want to take over Swiss. Both airlines swiftly denied such negotiations.

The story was good for a laugh, if nothing else - but the airlines need to get sensible.

Running a successful business is a tough job in good times. Good managers are ready for anything, all of the time, even when skies are clear.

When managements stumble, they often turn to the markets for more cash. In the case of airlines, they turn to the government.

A better idea would be to let these dinosaurs expire, even the newborn dinosaurs like Swiss.

That would be a big step in paring the the sector's overcapacity to meet today's reduced demand.

The private sector would seed startups to replace the dinosaurs - indeed, it's already happening in the no-frills segment all over Europe. These new airlines would essentially start from scratch - meaning they'd need new planes and increased efficiency to meet the needs of today's market. As a bonus, struggling aircraft-makers might get a bump in orders.

Low-cost flyers in Europe have proven there's a market for a new way of looking at the business, one that eschews the outdated, government-supported flag-carrier system.

It's time to keep government grounded on this one, and let the market flourish. That will solve the airlines' long-term problems.

Another article regarding the new 'swiss'-doesn't look very promising.

http://www.nytimes.com/2003/04/16/business/worldbusiness/16SWIS.html?ex=1051070400&en=8811d62cfe729225&ei=5062&partner=GOOGLE

April 17, 2003 5:52 PM

Airline staff demonstrate

Employees of the national airline, Swiss, have held a day of action at Zurich airport.
They were protesting against measures taken by the troubled carrier to end the current financial crisis.
Unions said staff also wanted to demonstrate their confidence in Swiss, which announced on Tuesday that it was suspending a number of flights due to suppressed demand.
Swiss has blamed economic uncertainty, the war in Iraq and the Sars virus for the decision.

http://www.swissinfo.org/sen/Swissinfo.html?siteSect=113&sid=1769837