Passengers may pay price for Air Berlin strife

Etihad is no longer willing to bail out Air Berlin's failing business model Keystone

Airline passengers in Switzerland are bracing themselves for a hike in prices for flights to Germany following the insolvency of budget carrier Air Berlin. The airline had been running at a loss for several years, prompting owner Etihad to pull the plug on Tuesday.

Air Berlin is particularly strong at Zurich airport, operating 11 daily flights to destinations such as Berlin and Düsseldorf. It is second only to Swiss International Air Lines in terms of passengers transported from Zurich airport.

A €150 million (CHF170 million) emergency credit line from the German government will keep Air Berlin flying until the end of August, but the long-term future of the carrier will probably boil down to a takeover from a rival.

It has been reported that Lufthansa, the owner of Swiss, is in talks to take over Air Berlin. It has also been speculated that budget airlines EasyJet or Ryanair could join the bidding.

If there is a future takeover, the new owner will have to take a hard look at a business model that has seen continuous losses since 2008. Last year, Air Berlin booked a €782 million annual loss. Even Etihad, based in the oil-rich Abu Dhabi, has decided it can no longer support the continuous haemorrhage.

Sale of airline slots

The Swiss newspaper Tages-Anzeiger sees only one result of Lufthansa buying up Air Berlin: more expensive tickets for passengers. “At first glance from the passengers point of view, the development [Air Berlin’s near collapse] is not so good,” the newspaper said in an editorial on Wednesday. “They must reckon with higher prices.”

Another option being touted for Air Berlin in the media is the sale of some airline slots. Traffic from Zurich to Germany is especially valuable. A spokesperson for Swiss told the Tages-Anzeiger that it was in principle always looking for opportunities to add new slots, regardless of their current owner.

Should that happen, competition to many German destinations would shrink.

In the meantime, Swiss tour operators are refusing to panic. Hotelplan Suisse and Kuoni said that all tickets already purchased remain valid. But the pair are less confident about their longer-term relationship with the German carrier.

In recent years, the United Arab Emirates flagship carrier Etihad had embarked on a buying spree of European airlines, such as Air Berlin and Alitalia. This included a majority stake in the Swiss carrier Darwin Airline, which it sold earlier this summer.