Marketing Week (MW): Can you take us back 10 years to the Swissair breakdown and the circumstances surrounding that?
Holger Haetty (HH): It was a very different time compared with now. There were three major airlines in Europe – British Airways, Air France, and Lufthansa. The thinking at Swissair was that it had to get big or it would get bought out by one of its competitors.
Swissair was known as the flying Swiss bank because it was a very rich company. It started to buy different airlines and paid incredibly high prices for 25% stakes. But if you have a 25% stake you have nothing to say [because of the limits of having a minority stake]. The business also bought a lot of ailing airlines. Swissair in its core was solid but all its money was going on these other airlines. So eventually it went bankrupt.
Perhaps the strategy wasn’t that wrong but the implementation was lousy. It was a shock because it was the largest ever bankruptcy in Switzerland. It was a national tragedy as nearly everybody in Switzerland had shares in the airline.
Lufthansa now has full ownership. Of course you can always learn from mistakes but the situation is different now.
MW: You have recently added the Middle East and China to the route list. Will you complete your coverage of the whole world by adding true longhaul destinations such as Australia and New Zealand?
HH: Just because we don’t fly to Australia doesn’t mean we are not a real longhaul airline. To fly to Australia doesn’t make sense for a European airline. An aircraft takes about eight hours to get to Asia, then you have two hours ground time and then it comes back. If you fly to Australia it takes another 12 hours, another two hours ground time, and then it goes back. It’s double the aircraft time but only a 1.2 return on revenue. So I don’t think this will be in our future plans.
MW: How does the marketing function work at SWISS?
HH: We have a central marketing function and a sales department in each country with one marketing representative. They refer to material they get from headquarters.
However, I encourage local creativity. Our central team isn’t able, for example, to write advertisements for the British market because we couldn’t translate a sentence to make it sound as amusing as something the tabloid press in Britain might write.
There is a renewed focus on marketing in the company, whereas previously it was more about engineering and flying. In the past, Swissair chief executives were engineers and pilots. Lufthansa chief executive, Christoph Franz, is the first who is a real business person. So, we are going to see more marketing people join us as a result.