Cobbaert 1 Laurence Cobbaert April 2015 The Rise and Fall of

Cobbaert
Laurence Cobbaert
April 2015
The Rise and Fall of SABENA
In May 1923, Belgium shut down its national airline, SNETA, replacing it with a new
Belgian national airline, which the government christened SABENA. With the shuttering of
SNETA, Belgians within a colony in the Congo were scheduled to lose their air service within
the year due to the cessation of operations by LARA, an interim company for both passengers
and cargo travelling between such locales as Kinshasha, Lisala and Stanleyville. Due to its
position supplanting SNETA and LARA, SABENA would go on to institute routes to
accommodate both Africa’s air travel needs and those of Belgium for access to the Belgian
Congo. During its early years, the aircraft SABENA used were the Farman Goliath, the Breguet
14 and a variety of other British-built Handley-Page aircrafts, which would come to include the
Handley-Page W8F and a few British Westland Wessex planes. By 1931, SABENA had a fleet
of forty-three planes with its aircraft of choice being the Fokker 7b, the smaller Fokker 7a, as
well as the Handley-Page planes (SABENA World Airlines).
Air France and Deutche Luft Hansa had an interest in the routes that flew over both
Africa and the Congo, and by the 1930s, SABENA would work with both companies on overflight rights and would start to fly regularly scheduled flights from Brussels to Leopoldville in
the Congo. SABENA flew planes to Tropical Africa, which was its Congo colony. At times,
however, these planes were generally transported out before the original flight time of fifty-one
days could be substantially reduced. SABENA would conduct its first regular long flight to the
Congo that took five and a half days in February 1935. By the following year, with the
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acquisition of a Savoia-Marchetti S.M. 73 SABENA would be able to reduce the time it took to
fly this route by a day and a half. During this period, SABENA would fly this route every other
week, with Air Afrique serving the routes during the opposite weeks (SABENA World Airlines).
SABENA opened up flights up to Europe with routes to Copenhagen and Malmo in 1931,
adding a flight to Berlin beginning in 1932. The routes to the Belgian Congo were continuously
maintained by SABENA up until World War II. By the time the war broke out in Europe which
would put a halt to all of SABENA’s flights, the company had a fleet eighteen planes. After
World War II, SABENA upgraded its inventory to Douglas DC-3 planes and resumed operations
under the new name of SABENA – Belgian World Airlines. Beginning in June, 1947, SABENA
instituted their first transatlantic flights to New York. In addition to the Douglas DC-3, SABENA
also enhanced its fleet with DH Dove twins and a variety of helicopters. In 1950, SABENA
bought Convair 240s to replace the DC-3 twins that served its European routes. The Convair
440 twin, known as the Metropolitan, would take the place of the Convair 240 twins that had
previously been employed. As the 1960s brought change to so many facets of culture and
civilization, so the decade would transform SABENA. As Zaire became increasingly developed
and capable of offering its own air service, SABENA canceled its regularly scheduled flights
from Belgium to the Congo. SABENA would also see the new Boeing 707-320, an
intercontinental jet capable of the long flights across the Atlantic to New York, become Europe’s
first airline to fly a jet over the Atlantic. In addition to its new transatlantic prowess, SABENA
also added six Sud-Est SE-210 Caravelle jetliners to its fleet that it utilized for medium length
flights throughout Europe (SABENA World Airlines).
In 1961, the Belgian Colony would become the Republican of Congo, leading to a
souring of relations with Belgium climaxing in the Belgians fleeing, transported by SABENA.
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With the exodus of the Belgians from the Congo came an end to the staggering number of flights
and SABENA’s control of airports in the Congo that it had developed since 1924. Eventually,
the Republican of Congo would start its own airline, Air Congo, with SABENA holding 30
percent of the company’s shares. By the mid-1960s, SABENA flew mostly Boeing 707s and
Caravelles, with the addition of Boeing 727-100s beginning in 1967 for its critical flights
throughout Europe, with a color scheme unique to the upgraded plane, making it SABENA’s
only plane besides the Douglas DC-10 to have its own paint scheme. Simultaneously, SABENA
rolled out the Fokker F-27 ‘Friendships’ for its Belgian airports to be used for European flights
(SABENA World Airlines).
SABENA differed from other European airlines because of the unique public-private
bargain arranged in 1923 and lasting until 1960. Under this arrangement, Belgium and the
Belgian Congo each owned approximately 25% of SABENA’s equity, with the remaining
portion owned by Belgian banks. SABENA’s unique equity situation would lead to disaster
when the Congo became independent in 1960 and the government in Brussels found itself the
owner of an airline of which one-quarter was held by a foreign government. In order to guarantee
that Sabena remained the property of Belgium, the government purchased four-fifths of the
private-sector holdings despite opposition by SABENA’s management. Nevertheless, after the
Congo’s independence, SABENA became a state-owned airline (Staniland). In 1971, the
government-owned SABENA purchased two Boeing 747-200s for the purpose of transatlantic
flights, which were replaced in 1973 with Boeing 727s for European flights. Additionally, in
1974 SABENA bought four Douglas DC10-30CFs to fill out its fleet. In the 1980s came the
introduction of Airbus A310s, which permitted flights with larger carrying capacities, along with
a modernization of the color scheme for SABENA’s aircraft, white with a blue logo on the
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plane’s fin. SABENA was a trusted European carrier, and it became the national carrier for
Congress of The Netherlands (Back Matter). SABENA – Belgian World Airlines took on a new
name in the 1990s becoming SABENA World Airlines. The 1990s would bring even more
changes to SABENA than cosmetic changes to their planes and an updated name (SABENA
World Airlines).
With the 1990s came more competition, particularly in the longer flight markets, as rising
cost of fuel costs impacted costs. Increased competition in airlines was occurring, and SABENA
was right in the middle of all of this industry upheaval (Doganis, “Flying Off Course”). More
competition for SABENA led to a rapid increase in total flight capacity that resulted in a need to
deeply discount empty seats in order to sell them. SABENA wanted to market Belgium as an
attractive tourist destination and attempted to increase revenues by inducing tourists to visit the
country, which had traditionally not been a location foreigners wished to see (Trout, Jack and
Ries). These inducements took the form of highlighting Belgium’s cuisine, but it was soon
discovered that that delicious waffles were an insufficient inducement to make travelers wish to
include Brussels or other areas of Belgium in their itineraries. SABENA made multiple further
attempts to beat out the competition by creating new routes to small European cities,
necessitating an increase in stops and an expansion of its fleet. This revamping of routes went
particularly poorly, resulting in significant daily delays in arrivals and departures, ultimately
being mismanaged to the brink of collapse. With minimal 1998 earnings, SABENA would
ultimately land in the red again in 1999, culminating in a staggering loss of $170 million in 2000
(Doganis, “Flying Off Course”). In 1993, Air France purchased a large minority stake in
SABENA which they sold soon thereafter. The benefit behind these “partnerships” between
airlines is the ability to market a larger number of routes, to accomplish greater passenger traffic,
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especially on international flights, and to increase competitiveness (Oum, Taylor and Zhang).
Swissair’s purchase of a 49% stake in SABENA in 1995 kept the company operational for a
period but ultimately led to the demise of SABENA in 2001 (Doganis, “Flying Off Course”) as a
result of circumstances that were at the time unforeseeable.
SABENA was offered state funding in the mid-1990s in an effort to save the doomed
airline. Unfortunately, mismanagement and misappropriation of these funds contributed to the
ultimate inability of SABENA remaining a financially viable airline. The mismanagement of the
proffered government help was due to a holistic culture of poor management which proved
unable to make difficult decisions. SABENA would attempt to launch a large development of its
hub operation in Brussels, another poor decision doomed to fail due to a surplus of flights in the
European market (Doganis, “The Airline Business”). SABENA ultimately failed here because
they offered too many European flights for which there were an insufficient number of
passengers. Eventually, SABENA determined that in order to achieve any long-term
profitability, it needed to eliminate approximately fifteen to twenty of its European routes and
the majority of its long-haul flights. Resolved to act, unfortunately, SABENA did not act
quickly enough (Doganis, “Flying Off Course”).
Due to the terrorist attacks of September 11, 2001, all airlines offering transatlantic
service were affected detrimentally. Swissair, which owed SABENA $84 million, had ceased
operations on October 2, 2001, without paying the funds owed to the Belgian airline. With this
credit default, SABENA was forced itself to cease operations. SABENA filed for legal
protection from its creditors on October 3, 2001. This bankruptcy filing allowed SABENA
approximately three weeks to get additional backing financially in order to retain solvency, but
the company was unable to do so and was ultimately liquidated on November 7, 2001 (Doganis,
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“Flying Off Course”). A contributing factor to the failure of SABENA was the Atlantic
Excellence Alliance between Swissair, SABENA, Austrian Airlines and Delta. Delta decided in
June 1999 that it was going to leave the alliance and develop a new global Alliance with Air
France, who had managed to remain apart from previous alliances. Not long after Delta’s
departure, Austrian Airlines decided it too was leaving its 44-year long alliance with Swissair to
which SABENA had been made a partner (Doganis, “Flying Off Course”).
The downside to not joining these alliances was the fact that such alliances dominated the
global passenger flight market (Oum, T., Taylor, A. and Zhang, A). Failure to maintain global
alliances are also prone to distorting competition’s playing grounds, resulting in competition that
was deemed to be unfairly misaligned (Dresner, Martin, and Windle). While Swissair and
SABENA had failed to establish a Switzerland-Belgium route, prior to this 2001 failure no other
airline had attempted to open this market. The failure of Swissair-SABENA to establish these
routes, given that it had no competition besides Ryanair, gave rise to an economic doctrine
known as SABENA syndrome, used to describe the demise of a business or division unable to
survive due to a too-small market base (Doganis, “Flying Off Course”). The financial crash and
burn of SABENA caused many other airlines to remap their flights throughout Europe, in search
of more cost-effective methods. The airline industry as a whole suffered immense blows after the
attacks of September 11, 2001, and sought to revamp its image quickly in an effort to ensure
continuing liquidity (Whitelegg). Airlines cut jobs and sought financial assistance from
governments in an effort to survive. Those airlines with resources already stretched to the limits
found themselves teetering on the edge of bankruptcy (Lawton), and only the fittest would
survive. In this new world of economic Darwinism, SABENA would find itself unable to
continue to exist.
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Works Cited
"Back Matter." The Comparative and International Law Journal of Southern Africa 19.1 (1986).
Institute of Foreign and Comparative Law. Web. 7 Apr. 2015.
Doganis, Rigas. “Flying off course: The economics of international airlines.” Psychology Press,
2002. Web. Retrieved 7 Apr. 2015.
Dresner, Martin E., and Robert J. Windle. "Alliances and code-sharing in the international airline
industry." Built Environment (1978-) (1996): 201-211. Web. 7 Apr. 2015.
Lawton, Thomas C. “Managing Proactively in Turbulent Times: Insights from Low-Fare Airline
Business.” Irish Journal of Management, January 1, 2003.Web. 7 Apr. 2015.
Oum, T., Taylor, A. and Zhang, A., “Strategic Airline Policy in the Globalizing Airline
Networks”, Transportation Journal, Vol. 32, No. 3 (SPRING 1993), pp. 14-30. Web. 7
Apr. 2015.
SABENA World Airlines. Web. 7 Apr. 2015.
Staniland, Martin. "La Sabena 1923-2001: Des Origines Au Crash." The Journal of Transport
History 24.1 (2003): 108. Web. 7 Apr. 2015.
“The airline business.” Psychology Press, 2006. Web. 7 Apr. 2015.
Trout, Jack, and Al Ries. “Positioning: The battle for your mind.” Replay Radio, Radio New
Zealand, 2000. Web. 7 Apr. 2015.
Whitelegg, Drew. “Flying for Peanuts: The Rise of Low-Cost Carriers in the Airline Industry.”
The Journal of Transport History, September 2005. Web. 7 Apr. 2015.