SAS follows the path paved by Norweigan

[ChasenSFO]

If you can't beat 'em...please...don't join them. Too late for SAS, though. I'm just going to leave this here...

http://www.sasgroup.net/en/sas-comp...ertificate-aoc-and-bases-outside-scandinavia/

SAS’s strategy is to focus on those customers who travel frequently to, from and within Scandinavia. SAS continuously develops its offering and network to meet this customer group’s needs. The air travel market in Europe is experiencing intense price pressure and rising demand for leisure travel. To secure the company’s long-term competitiveness and to take an active role in the growing leisure market, SAS is now taking a further step to reduce the cost differential to newly established competitors.

....Therefore, SAS has decided to establish a new AOC in Ireland with operational bases in London and Spain. The aim is for the new operations to be up and running from winter 2017/2018, providing a smaller number of departures as a complement to SAS’s existing production....

...At the start, smaller start-up costs for the new AOC and new bases are expected to impact earnings. Initially, the financial effects from operations at these bases will be small, but will gradually increase as operations grow....

Apparently, something similar is happening in the land down under where Jetstar has a Bangkok cabin-crew base for its long haul 787 flights from there...but tried to be sneaky by cycling in BKK cabin crew on Jetstars domestic A320 flights, with 50% of the pay. Regulators fought the airline on it, and lost. No bueno.

 

[Skåning]

I'm really bummed to hear this, as a kid SAS was a company I always really admired. Having family in Sweden we took them often to go visit. They've really lost their way the last 10 years or so, not being able to handle the competition and being managed poorly. This quote from the Irish Times really irritated me, loss of Scandinavian jobs:

The Irish unit will hire locally, while its cost advantage is more likely to come from lower social security expenses and taxes rather than from reduced wages, spokesman Fredrik Henriksson said.

Services will begin with “a handful of aircraft” with the same livery and service offering as SAS’s existing fleet.

SAS said on January 24th that it is selling Danish unit Cimber along with some regional jets to contract out more services on routes with lower traffic.

Start-up costs for the certificate and the new bases will hold back earnings, SAS said, without specifying figures.

SAS also reiterated that it will scale back operations elsewhere. The company said on December 15th that job cuts were planned.

http://www.irishtimes.com/business/...-ireland-and-set-up-bases-in-europe-1.2959139

I guess when you have SAAB 340s at mainline it only goes downhill from there

 

[bike21]

They've really lost their way the last 10 years or so, not being able to handle the competition and being managed poorly.

Rode on them last year and was surprised at how small the seat pitch was and water wasn't even included. On the plus side as non-revs we got our seats automagically assigned at the kiosk 2 hours before so that was comforting, but the onboard experience was a surprise.

 

[hook_dupin]

If you can't beat 'em...please...don't join them. Too late for SAS, though. I'm just going to leave this here...


Apparently, something similar is happening in the land down under where Jetstar has a Bangkok cabin-crew base for its long haul 787 flights from there...but tried to be sneaky by cycling in BKK cabin crew on Jetstars domestic A320 flights, with 50% of the pay. Regulators fought the airline on it, and lost. No bueno.

We're going to see it a lot more. Ireland's 12% corporate tax rate is very attractive to multi-nationals. I didn't see anywhere that they proposed to use third-world crew members.

I'm really bummed to hear this, as a kid SAS was a company I always really admired. Having family in Sweden we took them often to go visit. They've really lost their way the last 10 years or so, not being able to handle the competition and being managed poorly.

All the former nationalized airlines got hit hard as Europe combined to the EC. The good thing is that it's a huge win for consumers. I saw this stat:

Competition within the EU has strongly increased. In 1992, only 93 European routes were covered by more than two airlines. By 2011, this had risen to 482. As a consequence, passengers have more choice and prices have fallen sharply.

http://ec.europa.eu/internal_market/publications/docs/20years/achievements-web_en.pdf

 

[ChasenSFO]

We're going to see it a lot more. Ireland's 12% corporate tax rate is very attractive to multi-nationals. I didn't see anywhere that they proposed to use third-world crew members

Third world, no. However, I've read that they will be hiring nationals from Ireland and other parts of Europe skirting around the attractive compensation and benefits packages they are forced to provide in their homeland. It is a slippery slope...

 

[hook_dupin]

Third world, no. However, I've read that they will be hiring nationals from Ireland and other parts of Europe skirting around the attractive compensation and benefits packages they are forced to provide in their homeland. It is a slippery slope...

If they didn't do it, they'd cease to exist.

 

[ChasenSFO]

If they didn't do it, they'd cease to exist.

Possibly, but if/when another 9/11 hits and/or fuel prices surge again, SAS with it's vast Star Alliance Network full of codeshares from various carriers, varied flying, and cooperate travel will leave them looking a lot better than Norwegian who relies very heavily on leisure travel and rock bottom pricing. For example, if a few airliners go kaboom over the Ocean and security hassles elongate aircraft turn times and leisure travel demand plummets, Norweigan with their ultra-tight ground times and all coach leisure product will suffer. Less demand means they will have to either lower prices even further to try and spike demand, or raise prices to compensate. Norwegian would also have a nightmare trying to operate their few weekly flights to this city or that city when their schedule becomes impossible. Meanwhile, SAS will continue to fill up with connections off United and other airlines, make money of premium classes, and adapt to the changing market. Time will tell, I suppose. But I do think this ULCC long-haul bubble will pop.

 

[hook_dupin]

Possibly, but if/when another 9/11 hits and/or fuel prices surge again, SAS with it's vast Star Alliance Network full of codeshares from various carriers, varied flying, and cooperate travel will leave them looking a lot better than Norwegian who relies very heavily on leisure travel and rock bottom pricing. For example, if a few airliners go kaboom over the Ocean and security hassles elongate aircraft turn times and leisure travel demand plummets, Norweigan with their ultra-tight ground times and all coach leisure product will suffer. Less demand means they will have to either lower prices even further to try and spike demand, or raise prices to compensate. Norwegian would also have a nightmare trying to operate their few weekly flights to this city or that city when their schedule becomes impossible. Meanwhile, SAS will continue to fill up with connections off United and other airlines, make money of premium classes, and adapt to the changing market. Time will tell, I suppose. But I do think this ULCC long-haul bubble will pop.

I see the decision to be a LCC as different than the decision to pay 12% corporate taxes over 45%. The guy paying more tax money just passes that on to consumers and thus isn't as viable.