March 31st 2002 was an unusual day; Switzerland lost its 71-year-old national flag carrier and at the same time gained a new national flag carrier.
Swissair was established on the 26th of March 1931 with the merger of Balair and Ad Astra Aero. While the airline had a rocky start, only flying during the summer months, then an interruption of service during World War II, the airline grew into a strong competitor. Swissair’s national neutrality gave the carrier a competitive advantage during turbulent times that allowed the carrier to freely carrying travelers from throughout Europe and North America to profitable business centers in the Middle East and Africa.
Eventually Swissair founded Crossair in 1978 during deregulation then achieved finical stability through the acquisition of ground handling services, duty free shops, aircraft Maintenance, repair and overhaul (MRO) and catering services. While the future seemed bright for Swissair entering into an alliance with Delta Air Lines and Singapore Airlines in 1989, only to leave an join an alliance with SAS, Finnair and Austrian Airlines in 1990, a spike in fuel costs due to the Gulf War and Switzerland’s political decision to not join the European Economic Area in 1992 would signal a slow death for Swissair.
Switzerland’s rejection of participating in the European Economic Area impacted Swissair’s ability to operate Fifth Freedom routes via European Economic Area countries, such as Geneva-Paris-Boston or Zurich-Munich-Amsterdam. These new restrictions disallowed Swissair from picking up passengers in non-Swiss cities and transporting them to an onward non-Swiss destination.
To try and make up for lost revenue Swissair invested substantially in multiple foreign airlines, but this strategy spread the airline thin, especially its 49.5% stake in the failing Belgian national airline Sabena in 1995. Swissair’s inability to cover its debts related to its financial stakes in 12 airlines, coupled with the downturn in the airline industry following the September 11 2001 terrorist attacks on the United States caused the airline to begin defaulting on its loans.
In early 2002 Swissair’s subsidiary Crossair was sold to Credit Suisse and UBS, with this sale Crossair took control of Swissair’s aircraft, employees and routes … and on the 31st of March 2002 Crossair officially changed its name to Swiss International Air Lines.
Without any interruption in service on the 31st of March 2002 there was an unusual transition from one airline with a tail flying the Swiss flag to another airline with a tail flying the Swiss flag … and Switzerland lost one national flag carrier and gained another.