‘New SAS’ targets flying Norwegians

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Hardly anyone flies as much as Norwegians do on a per capita basis, and now Scandinavian Airlines (SAS) is on the offensive, promising more direct routes from Norway, new aircraft and even more entertainment on board. Rival Norwegian Air is already feeling the pressure.

At SAS it’s suddenly a feeling of “up, up and away,” after a tough period of historic turbulence. Norwegians seem more than ready to fly. PHOTO: SAS

SAS emerged this week from months of historic turbulence after reaching agreement with its employees’ unions on a massive cost-cutting plan. The plan, however, isn’t cutting SAS’ ambitions to continue to play what it calls “an important role in the lives of millions of people in Scandinavia.”

On the contrary, SAS management claims that with new financing in hand and lower costs, the airline can develop and expand. In full-page ads placed in local newspapers on Wednesday, SAS chief executive Rickard Gustafson called SAS “an airline with a new future.”

He announced 37 new routes to be launched soon, and a total of 45 by next summer. SAS will introduce new aircraft, better service on board and at the airport, more airport lounges and more routes to new holiday destinations, at what he called “fantastic” fares.

CEO Rickard Gustafson called SAS “an airline with a new future.” He cut his executive pay, as did members of SAS’ board, as part of the airline’s cost-cutting plan. PHOTO: SAS

Newspaper Aftenposten reported that SAS has been working on a new “product strategy” for the past year that also will reintroduce two classes of service on domestic flights, new entertainment options on board and more new Boeing 737-800 jets, the same type that Norwegian Air offers in its fleet. Passengers willing to pay full fares can soon relax in new lounges at airports serving SAS’ domestic network, and passengers from Norway and Sweden won’t have to travel through Copenhagen as often. New Airbus A320s are also on order, for longer haul flights, opening up new route possibilities.

Analysts and travel industry executives seemed to agree that SAS will now be a much more vigorous player in the highly competitive airline industry, even a “more dangerous” competitor. “Now Norwegian will have to closely follow what SAS is doing,” Rune Feltman of VIA Egencia, Norway’s largest travel agency chain, told Aftenposten. A “new SAS” with lower costs will be a challenging rival for Norwegian, Feltman said.

Kenneth Sivertsen, an analyst at Arctic Securities in Oslo, said SAS “now has a foundation to rest on for awhile,” but he doesn’t expect an ongoing wave of low fares. It’s one thing to offer lower fares, agreed Feltman, another to be able to live with them.

SAS is also challenged by the likes of Air France KLM, British Airways and even its Star Alliance partner Lufthansa, but also enjoys customer loyalty. Many passengers rave about SAS’ service and reliability despite its various financial crises in recent years, and won’t switch carriers. Two musicians on their way to Paris told Aftenposten, for example, that they often have trouble carrying their instruments on board on other carriers, but never on SAS.

Norwegian feeling the heat
Meanwhile, newspaper Dagens Næringsliv (DN) reported Wednesday that the former information technology director for Norwegian Air, Hans-Petter Aanby, has now gone to work for SAS, a move unwelcome by Norwegian which is legally challenging his move to the airline’s arch-rival. Aanby quit his job at Norwegian last spring and is leasing his services to coordinate internal data systems at SAS as a private consultant.

“We of course are reacting to this,” Anne Sissel Skånvik, communications director in Norwegian, told DN. “It’s easy to take information and business secrets along.” Norwegian is accusing him of starting to work at SAS before a quarantine period was over. Aanby was a closely involved in building up both Norwegian and Bank Norwegian, including developing electronic solutions for ticket sales over the Internet and mobile platforms.

Frequently flying Norwegians
Passengers in Norway are expected to continue flocking to both SAS, Norwegian and other carriers, a trend not lost on Air France KLM and travel industry officials from as far away as Chile, who were in Oslo this week to promote the South American country and routes to it as a holiday destination. A new study shows that Norwegians fly much more than Danes and Swedes, not to mention other Europeans.

Residents of Norway, which has just 5 million inhabitants, took 14.6 million flights last year, just within the country. Passengers from Norway also have been the most profitable for SAS during its last difficult 10 years.

New figures from the EU’s statistics bureau Eurostat show that domestic and international airline traffic tied to Norway last year was more than twice that per Swedish resident, and 40 percent more than Danes. The sum of all flights in and out of Norway amounted to 32 million last year, compared to 30 million in Sweden, which has twice as large a population.

Jon Martin Denstadli of Norway’s transport economic institute wasn’t surprised. “We have a long ocuntry with difficult topography and a lack of alternative modes of transportation,” Denstadli told Aftenposten on Wednesday. “It takes a long time to drive and the trains are built to compete with the airlines.”

Norwegians’ affluence has also increased greatly in recent years and they’re traveling more on both business and pleasure. The single most popular international destination from Norwegian airports last year was London, followed by Copenhagen (because of SAS’ connections, which may change), Stockholm, Alicante (Spain) and Amsterdam.

Views and News from Norway/Nina Berglund

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