Swissair's Collapse - An Economic Analysis

Abstract

Swissair's rapid decline from one of the industries' most renowned carriers into bankruptcy was the inevitable consequence of an ill-conceived alliance strategy - which also diluted Swissair's reputation as a high-quality carrier - and the company's inability to coordinate effectively its own operations with those of Crossair, its regional subsidiary. However, we hold that while yearlong mismanagement was indeed the driving force behind Swissair's demise, exogenous factors both helped and compounded it. These in- clude, in our view, first and foremost, the Swiss people's rejection of the European Economic Area (EEA) Treaty in a 1992 referendum, Switzerland's protectionist avia- tion policy, and media failure.