Scandinavian Airlines (SAS) was running large ads in Norwegian media on Tuesday after state authorities allowed the carrier to resume its frequent flyer bonus program on flights within Norway. It was banned 11 years ago when rival Norwegian Air started up service, to prevent SAS from being too dominant in the domestic market.
The re-launch of SAS’ so-called “EuroBonus” program on domestic routes was still stirring up turbulence, however, with some analysts and competitors predicting it will lead to higher ticket prices and less competition.
Norwegian Air is now far more profitable than SAS, but its boss Bjørn Kjos was none too happy about SAS being able to offer EuroBonus points on routes within Norway. He claimed it may prompt Norwegian to stop flying on some routes, even though it will offer frequent flyer credit to its passengers, too.
Kjos, questioned by Norwegian Broadcasting (NRK) while on his way to 17th of May festivities on Friday, said that offering frequent flyer benefits will bring “extra costs,” and those costs “must be evaluated,” especially on routes that already are expensive to run. He said the frequent flyer costs could further cut into “sustainability” of routes to small airports in remote parts of Norway, suggesting such routes may be dropped. “We’ll have to look at that,” Kjos told NRK.
Rickard Gustafson, chief executive of SAS, scoffed at Kjos’ thinly veiled threat. He also denied that offering SAS EuroBonus points, which eventually can be redeemed for free flights or upgrades, will lead to higher ticket prices and less competition.
“I don’t understand Norwegian (Air) or the discussion going on over the weekend,” Gustafson told newspaper Dagens Næringsliv (DN) on Tuesday. “History shows that airlines evaluate their route networks whether there are loyalty programs in the market or not.”
DN noted that Norwegian already has pulled out of routes along the coast from Ålesund via Trondheim to Northern Norway, where it competed against SAS. Norwegian’s communications director Anne-Sissel Skånvik said the airline’s goal was “to have as broad a route system as possible, but not all routes are profitable, and then we unfortunately can’t operate them.”
SAS, meanwhile, was delighted Thursday night when the government said it would “reluctantly” allow frequent flyer bonus programs on domestic routes, to avoid a legal challenge from EU regulators. SAS thus spent the weekend preparing a re-launch this week.
“If you look around the world, you can’t find markets where bonus programs led to less competition,” Gustafson said. “To the contrary, because competition in the airline industry is very hard. It will be in the future as well.”
SAS has been suffering on many routes for many years, and maintains that being able to offer bonus points to passengers is an important means of securing customers. SAS is a member of Star Alliance, in which some of the world’s largest airlines cooperate on routes and honour each other’s frequent flyer programs, including United’s Mileage Plus and Lufthansa’s Miles & More. Norwegian, on the verge of expanding into long-haul routes to Asia and North America, isn’t yet part of such an alliance.
Views and News from Norway/Nina Berglund
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